Most contract disputes we see are not about bad faith. They are about a document that simply did not say what happens next. These five clauses prevent the large majority of them.
1. Payment terms, in numbers
How much, when, by what method, and what happens when it is late. “Net 30” without a late fee and an interest rate is a request, not a term.
2. Scope and change orders
Define what is included, and set out in writing how extra work is requested, priced and approved. Scope creep is the single most common cause of small business litigation.
3. Termination
Either side should know how to end the relationship: notice period, what is owed on exit, and who keeps what.
4. Dispute resolution and venue
Name the state whose law applies and the county where a dispute is heard. Litigating three states away can cost more than the contract is worth.
5. Limitation of liability
Cap your exposure at something proportionate — often the contract value — and exclude consequential damages.
