After the contract definitions (read our guide on the definitions clause here) typically comes one or more clauses dealing with the main subject of the contract, i.e. the delivery of goods and/or performance of services.
These are key because they dictate how much a supplier is legally committing to and the rights and remedies the customer would have if there was a delay or defect in performance. Here are a few things to consider:
Time of the essence – does the contract mention that ‘time is of the essence’ for performance? This wording means that performance by the agreed date(s) will be a key condition of the contract and any delay would be a material breach of contract. This works in a customer’s favour by making the performance date(s) fixed but a supplier should consider removing it or adding some conditionality, particularly if the timeline could shift or is subject to various dependencies.
Reasonable endeavours – you might see a mixture of ‘reasonable’, ‘all reasonable’ and/or ‘best’ endeavours in contract terms. Whilst there are nuances in what each of these means, the general purpose is to lessen the legal commitment being made, so instead of saying a party shall do something, it says they will use reasonable endeavours to do it. These terms have their place in contracts but you should check they are not being used to weaken key performance commitments.
Performance standards – what performance standards, if any, is the supplier required to meet? For example, there may be specific specifications or standards that goods/services must conform with, quality warranties and some form of inspection/acceptance process to give the customer time to verify that the standards are met. The customer will want sufficient assurances around the quality of performance based on the money being paid, whilst a supplier will want to avoid giving the customer too much power to reject.
Remedies – are there any specific rights and remedies in the event of a delay or defect in performance? A right to require repair, replacement or re-performance is not uncommon but a supplier should look out for stronger rights, such as the ability to claim liquidated damages, or to cancel the entire contract and receive a full refund.
Get in touch with the team if we can help with your contract queries.