Arbitration Clause
This states that if there’s a dispute under this contract, we should avoid filing lawsuits immediately. Instead, let’s discuss the matter first. This clause mandates not to resort to legal action right away because the aim is to preserve the business relationship. We should include in our contract that for any disputes arising from it, we agree to sit down and talk. If we can’t come to an agreement, only then should we proceed to file cases against each other.
Venue
This specifies where a case can be filed. The words exclusive and only are crucial. You must include in your contract that if a case will be filed, it must be exclusively in the agreed venue, excluding all other courts.
Scope of Service
If you’re a freelancer offering your legal services, defining the scope of service is critical to avoid being asked to handle unrelated tasks. It is important to clearly outline what you need to do and what you’ll charge for it. A dangerous provision is when the scope of service includes a vague phrase like "and any other related service." What does "any other related service" mean?
Pricing Agreement
This outlines the different schedules for cash flows. What’s important here is the inclusion of interest payment terms. Under the law, if your agreement about interest isn’t in writing, you can’t charge interest if there’s a delay. This is separate from legal interest, which only applies when you issue a demand. For example, in a loan agreement, if no interest is stipulated or agreed upon, you can’t collect any interest.
Purpose of the Contract
When interpreting a contract, it’s crucial to consider its purpose. If there are ambiguities or unclear terms, they should be interpreted in line with the intended purpose of the agreement.
Confidentiality
You should explicitly include that any information obtained in relation to the contract is confidential. If the other party leaks or gossips about it, you can sue for breach of contract. Additionally, this could violate the Data Privacy Act, leading to multiple cases.
Sale of Goods Warranty
What are you warranting? As the seller, you’re warranting that your products are genuine goods. On the buyer’s side, they have the right to certain warranties—essentially, assurances about the quality and condition of what you’re selling.
Terms
Contracts don’t last forever. You need to set a timeline. How long will the service last? What happens after the service is completed? Define the turnover procedures.
Exit Provision
What happens in the event of a breach of contract or if one party wants to terminate the agreement? What are the grounds for termination? For instance, could a lack of satisfaction be a valid reason? There are provisions that allow termination with a 30-day notice or other similar conditions. We have the freedom to include specific terms in contracts as long as they are neither illegal nor immoral.
The name of the contract doesn’t really matter—it’s substance over form. Even if you label it as a memorandum of agreement or a memorandum of understanding, the substance of the document will prevail. For instance, even if you call it a rental agreement, but the provisions indicate a purchase, then it’s considered a purchase agreement. The substance of the document determines what it truly is.A contract is valid regardless of its name. As long as you’ve set terms and agreements, and both parties have signed it, it’s a binding contract. Whatever you choose to call it, as long as the agreed-upon conditions are included and both parties have signed, it qualifies as a contract.
Termination provisions can be included. Grounds for termination can be specified, such as whether a simple misunderstanding is sufficient or if non-payment within a certain number of months justifies termination.An exit provision can be added. If a contract is terminated before the agreed term ends, damages may be imposed. For instance, pre-termination before the term ends could require payment of a specific amount as compensation.A pre-termination clause can state that, in the event of a breach of contract and subsequent pre-termination, the party at fault may no longer be allowed to enter into future agreements.
Don’t resort to filing a public complaint right away! Focus on reinforcing arbitration, like restructuring the terms. As much as possible, don’t give up immediately. If no agreement is reached, offer a compromise. For example, suggest dividing the debt into six monthly payments. However, if the other party goes AWOL, start with a demand letter—at least two demand letters.This is where small claims come in. If the debt owed to you is below 2 million, you can go to court without needing a lawyer. The court will provide a form; simply fill it out and attach proof of the debt. Even without a lawyer, both parties will appear in court, and restructuring or alternative solutions can still be proposed and discussed there.
The terms of payment can be discussed and agreed upon.It’s important to include a clause stating that no demand is necessary if payment is not made within the specified terms. If payment is delayed, there’s no need to issue a demand letter to notify the debtor of the delay. Once payment is overdue, legal action can be taken.If payment is not made within a certain period, interest will apply. It must be emphasized that the interest rate should not be unfair. The legal interest rate is 6%.
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