Commercial Agreements
Commercial agreements are legally binding documents that outline the terms and conditions of a commercial relationship between two or more parties.
Whether you are negotiating a partnership agreement, joint venture agreement, outsourcing arrangement, master service agreement, distribution agreement or one of many other forms of commercial arrangements, a well-drafted commercial agreement can help ensure that all parties are aware of their rights and obligations.
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What is a commercial agreement?
Commercial agreements cover a wide range of business transactions, including the sale of goods or supply of services, licensing arrangements, joint ventures (including as shareholders, partners and co-venturers), and outsourcing agreements. They typically include key provisions, including responsibilities of each party, payment terms, intellectual property and confidentiality terms and dispute resolution mechanics.
Commercial agreements help to provide clarity for everyone involved, helping to avoid misunderstandings and disputes. It also provides a framework for managing risk and protecting individual parties’ interests.
What types of commercial agreements are there?
There are different types of commercial agreements, designed to address specific needs and goals of a business. These agreements include the following but there are many more and they can often incorporate several elements in one contract:
Sale of Goods: terms and conditions of the sale of goods, e.g. description of the items, pricing, delivery options, warranties as to quality
Supply of Services: terms and conditions for the supply of services, e.g. nature of the services, pricing, how provided and whether includes on site work, ownership of intellectual property in deliverables
Distribution: establishing the relationship between suppliers and distributors for the onward sale in a particular territory, including exclusivity arrangements, obligation to promote sales and quality control
Franchise: when a brand is licenced to a third party, setting out what the franchisor provides, protecting intellectual property rights in the brand, and maintaining standard and reputation
IP license: setting out the terms on which a party may use another’s software or other intellectual property
Joint Venture/Partnership: where two or more parties collaborate on a project or business, establishing their respective rights in decision making and sharing the profits.
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What are the key components of a commercial agreement?
The key components of commercial agreements include:
the purpose of the agreement
each party’s respective obligations (both what to do and what they cannot do)
payment terms
ownership of intellectual property
confidentiality
termination
warranties
limitations and exclusions on potential liability for breach and dispute resolution
These are just a few examples of commercial agreements and their key components. It is important to work with an experienced lawyer to ensure that a commercial agreement is enforceable and provides the necessary legal protections.
Why choose Nash & Co Solicitors?
We work closely with you to identify which commercial contracts would be necessary for you to have. Once this has been established, we’ll then write the agreements for you. In doing so, we’ll consult closely with expert lawyers from our Employment Law, Corporate Law, and Commercial Property teams. This allows us to ensure that you are fully protected, and every possible aspect is considered.
Our advice is always pragmatic, practical and commercially focused. Our Commercial lawyers take the time to learn what your business goals and objectives are. Once we understand your needs, we’ll work to help you achieve them.
Frequently asked questions
In this comprehensive video series, our experienced corporate and business law experts will tackle a wide range of topics and questions that commonly arise in corporate and business environments. From legal structures and contracts to intellectual property and employment law, we've curated this series to empower you with practical information and valuable insights to help your business thrive.
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A commercial agreement is usually a contract. There can be some instances, such as heads of terms, where much of the document is not legally binding, but these are a minority of cases.
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If a party breaches a commercial agreement, the other party may have legal remedies available to them. The specific remedies available will depend on the terms of the agreement and the nature of the breach. These can include claims for damages, injunctions and termination.
If you believe that a party has breached a commercial agreement, you should seek legal advice to determine your options and the best course of action.
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A commercial agreement can be terminated early, but whether early termination is possible and under what circumstances will depend on the terms of the agreement. Most commercial agreements will contain provisions setting out the circumstances for early termination and in limited specific circumstances a serious breach of contract can allow termination by law even if not expressly provided for in the contract. But in most cases, a less material breach will not automatically allow termination by the other party unless this is expressly drafted for.
It is important to note that the specific terms and conditions of early termination will vary depending on the agreement in question. If you are considering terminating a commercial agreement early, it is important to review the agreement carefully and seek legal advice to ensure that you are acting in accordance with the terms of the agreement and any applicable legal requirements. Asserting termination as a result of the other party’s breach where this is not allowed under the agreement can leave the party making the assertion exposed to a claim for unlawful termination.
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The duration of a commercial agreement will depend on the terms negotiated by the parties involved. The duration can vary widely depending on the type of agreement, the nature of the goods or services being provided, and the needs of the parties involved. In some cases, the duration of the agreement may be open-ended, meaning that the agreement will continue until one of the parties decides to terminate it or some specified event occurs.
It is important to note that the duration of a commercial agreement should be agreed upon by the parties involved during the negotiation phase and should be clearly set out in the terms of the agreement. If you are considering entering into a commercial agreement, it is important to carefully consider the duration of the agreement and negotiate terms that meet your needs and protect your interests.
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Commercial agreements can be amended or modified after they have been signed by the parties involved, but it is important to follow certain procedures to ensure that any changes made are legally enforceable. This will usually require the agreement of all of the parties to the agreement and these changes should be made in writing and signed by all parties involved. This can be done by way of an amendment or addendum, which sets out the changes that are being made and the effective date of those changes.
Sometimes commercial agreements may contain specific provisions that allow one or more of the parties to make certain changes, either to cater for changes in the law or other external factors, or for any reason on notice to the other parties.
Changes made to a commercial agreement may have legal implications and may affect the rights and obligations of the parties involved. It is important to review any proposed changes carefully and seek legal advice to ensure that the changes are in your best interests and do not create any unintended consequences.
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Lawyers play an important role in drafting and negotiating commercial agreements. Their role is to ensure that the agreement accurately reflects the intentions of the parties and protects their interests.
They will identify and address potential legal issues, ensure that the agreement complies with all relevant laws and regulations, and protect their client's intellectual property, confidentiality, and other proprietary rights. They will also work to resolve areas of disagreement before preparing the final agreement and ensuring it is executed correctly.
Their expertise can be critical in preventing future disputes and ensuring the agreement is legally enforceable.
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