Analyzing & Understanding a Contract - Assignment Example

Analysing & Understanding A Contract The and Analysing & Understanding A Contract Definition of legal English terms in the agreement (Bryan 2004) 1. Hereby (Cl.1): by these very words. 2. Render (Cl.1): make formally. 3. Prior (Cl.2): earlier in time. 4. Execution (Cl.4): to validate the agreement by fulfilling the necessary legal formalities. 5. Pursuant to (Cl.5): in compliance/accordance with. 6. Strict compliance (Cl.8): rigidly conform to terms of the agreement. 7. Disclose (Cl.9 (2)): reveal /divulge confidential facts. 8. Assigns (Cl.10): to transfer rights or property under the agreement. 9. Merger (Cl.13): the act of combining/ unification of the company with other entities. 10. Binding (Cl.15): to impose legal duties on the parties. 11. Deemed (Cl.17): considered given. 12. Construed (Cl.24): interpreted in accordance with. Navigating and Understanding Commercial Contracts The key clauses in the agreement and their roles are discussed below; (Beal 2010) 1. INDEPENDENT CONTRACTOR 2. EXCLUSIVITY-this clause ensures that the contractor’s services are exclusive to the company. The contractor is not allowed to work for other entities without the company’s consent. 3. SERVICES TO BE PROVIDED- the clause sets out the duties of the contractor covered by the agreement and who the contractor will be accountable to. 4. TERM-stipulates the duration of the employment agreement between the contractor and company. 5. COMPENSATION-sets out how the contractor will be compensated for service rendered to the company under the contract. 6. INVOICING-this clause sets out how the company will pay the contractor for services rendered under the contract. 7. EXPENSES-this clause sets out how the company will have to reimburse the contractor for expenses incurred while fulfilling the terms of the contract. 8. WAIVER- the role of this clause is to ensure that in future parties don’t waive their right to insist on strict compliance with the terms of an agreement because they decided not to enforce terms of the agreement strictly on certain occasions. 9. TRADE SECRETS AND CONFIDENTIALITY- creates a confidential relationship between the parties by restricting the contractor from disclosing the company’s confidential information. 10. INVENTIONS- this clause ensures that there will be no legal ambiguities in future by transferring patent rights to the company. 11. CONFLICT OF INTEREST-this clause ensures that the contractor upholds the company’s best interests during the term of the contract. 12. NON-HIRE PROVISION-under this clause the contractor is under an obligation not to compete with the employer’s company for a period of six months after he/she has stopped working for the employer. It prohibits poaching and soliciting of employees from the company. 13. MERGER-the purpose of this clause is to declare the independent contractor agreement as the final agreement between the parties to the contract. It supersedes previous agreements. 14. INSURANCE-this clause requires the contractor to maintain insurance to protect the company from damage resulting from performance of the contract. 15. SUCCESSORS AND ASSIGNS-since contracts only bind parties to the agreement this clause ensures that it will also bind and benefit new parties to the agreement. 16. TERMINATION-this clause gives both parties to the agreement the express right to terminate the agreement because of the reasons listed in the agreement. 17. SERVICE OF NOTICES-this clause ensures that there is no confusion by stipulating the proper means of giving notice. 18. ASSIGNMENT – this clause is meant to determine whether or not the rights, duties and obligations under the agreement may be transferred and also sets the conditions for doing so. In this agreement the condition is that the other party has to consent to the transfer. 19. SEVERABILITY-the role of this clause is to emphasize the fact that the terms of the agreement are independent of each other. The fact that a clause is unenforceable doesn’t necessarily render the whole agreement unenforceable. 20. WRITTEN REPORTS- this clause emphasizes the fact that any amendments to the terms of the agreement should be strictly in writing in order to validate those amendments. 21. ENTIRE AGREEMENT –this clause is included to clarify that the agreement between the parties is the one stipulated in the contract in order to prevent preceding statements, agreements or presentations that are not included in the agreement from having a contractual force. 22. FORCE MAJEURE –this clause in the contract is meant to exempt the parties from fulfilling their obligations under the contract or from liability in the event of unforeseen occurrences beyond the control of the parties such as acts of God, failure of third parties, terrorist acts and so forth. 23. LANGUAGE- this clause ensures that there is a standard language in the agreement 24. CHOICE OF LAW –since laws vary from jurisdiction to jurisdiction this clause specifies the laws of the jurisdictions the parties have mutually agreed on to govern the interpretation and application of the contract 25. ARBITRATION- this clause expresses the parties’ intention to settle disputes arising under or relating to the contract through alternative dispute resolution mechanisms such as arbitration. 26. HEADINGS –common law dictates that an agreement must be construed as a whole. The headings clause is usually used to express the parties’ desire in order to make the terms of the contract clear and unambiguous when interpreting the whole contract. Specifics in the Agreement The contract will start once all legal formalities have been fulfilled. Once the stipulated period has expired or the contractor has completed his duties under the agreement, the agreement will be terminated. (CL.4) CL.7 stipulates that all disbursements and expenses incurred by the contractor in the course of fulfilling his duties and obligations under the agreement will be indemnified by the company (employer) upon presentation of documentary evidence such as invoice. However, those expenses incurred must be approved by the employer beforehand. The exclusivity clause (CL.2) provides that during the duration of the contract the contractor’s services are exclusive to the company. The contractor is prohibited from offering his services to other entities without the company’s permission. The assignment clause (CL.18) provides that the rights, duties and obligations of the contractor under the agreement can’t be transferred. Under this agreement, the contractor’s son and wife can do the work on his behalf on condition that the company has to consent to the transfer. The inventions clause has ensured that there will be no legal ambiguities in future by transferring patent rights to the company. This is because the clause compels the contractor to transfer invention ownership rights to the company. Under this agreement the company owns intellectual property rights of inventions. (CL.10) The contract will still impose legal duties on the contraction after the contract is terminated. This is because the non-hire provision places the contractor under an obligation not to compete with the employer’s company for a period of six months after he/she has stopped working for the employer. (CL.12) The clause prohibits the contractor from poaching and soliciting employees from the company after the contract has been terminated. This means that the contractor won’t be able to set up a business with the company’s staff. The agreement has an arbitration clause (CL.25) .The parties’ have expressed the intention to settle disputes arising under or relating to the contract amicably through alternative dispute resolution mechanisms such as the arbitration process. Analysis and conclusion. Under independent contractor agreements the contractor renders his services to other people pursuant to his own methods and ways. Apart from what is specified as mutually binding terms on the parties in an agreement, the contractor is not subject to the employer’s control. The employer usually contracts the contractor to carry out a specific job and the contract is terminated once the performance of the contract as a whole has been fulfilled. This agreement has to be analyzed critically so as to determine its pros and cons. From a critic point of view the agreement is not balanced. The fact that the independent contractor’s services don’t form an integral part of the company’s business places the contractor at a disadvantage. An independent contractor doesn’t enjoy employment benefits such as paid vacations, health insurance, retirement benefits, sick leave, workers’ compensation and so forth. (CL.1) On the other hand the employer (company) has an advantage because avoiding expenses related to the standard employment benefits mean high profit margins for the company. The fact that independent contractors assume liability reduces the employer’s risk of liability by a wide range. The agreement favours an independent contractor because he controls his working hours and methods of performing the contract. In conclusion, whether the contract is fair, balanced or unfavourable depends on the approach taken because an independent contractor agreement has got both advantages and disadvantages. References Bryan, A.G., 2004. Black’s law dictionary. 8th ed.West Publishing Company. Beale, A., 2010. Key terms for your contract. [Online]. Available at: http://www.mondaq.com> [ accessed 30th November 2010] Read More