Frequently Asked Questions About Commercial Contracting - ADA Blog

Frequently Asked Questions About Commercial Contracting

by Jarett A. dePaula
03/25/22 (Updated: 04/01/22)

If you are thinking about hiring a contractor for commercial purposes, it is important for you to make sure you have a firm contract in place. A contract is essentially a mutual promise between two parties. If you are hiring a commercial contractor, you promise to compensate them in accordance with the work they provide. In exchange, the commercial contracting company is promising to complete certain work for you.

It is important for you to make sure the contract says what you think it says, which is where commercial contract law is critical. What are a few of the most common questions people ask about commercial contracts? Take a look at a few key points below. 

1. Are The Proper Names of Both Parties Being Used?

First, you need to take a look and see what names are being used. You need to make sure the proper names of both parties are used in the document. If the name of the company is not correct, or if the name of the person paying the company is not correct, then the contract may not be enforceable.

Therefore, always take a close look at the names on the contract and make sure they are spelled appropriately. Better yet, reach out to a lawyer with experience dealing with commercial contracts to make sure the contract has been drawn up appropriately. 

2. Is The Scope of Work in the Contract Appropriate?

You also need to make sure that the scope of work is appropriate. What this means is that you need to clearly specify what the commercial contracting company should do and what the company is not going to do. For example, if you are hiring a commercial contract company to fix the windows of your house, you may not be hiring the same company to fix the roof. Does this mean they're going to fix the skylight on your roof? Does this count as a window? Make sure this is clearly specified.

This same question can have implications in the digital world as well. For example, you might be hiring a company to design a website for you. Are you also hiring that company to write the content that goes on the website? Are you hiring the company to take care of that website after it is up and running? Make sure the scope of work is clearly specified in the contract.

3. Does the Contract Address Potential Complications?

It is impossible to anticipate everything that could possibly go wrong. At the same time, there are likely several common complications you can probably anticipate. The contract should spell out what happens in these situations because it can streamline things down the road.

Some of the most common issues you may run into after signing a commercial contract with a company include:

  • What happens if someone becomes incapacitated and is no longer able to fulfill the arrangements in the contract?
  • If one party wants to exit the contract, what are the implications of doing so?
  • If one party fails to deliver on time, what are the penalties?
  • Is this contract going to expose any sensitive information? If so, how is this going to be handled?
  • What happens if the commercial company finds they are no longer able to deliver the finished product? 

Make sure you anticipate these potential problems as you are drawing up a commercial contract. A lawyer with experience in this area can help you. 

4. Is There a Force Majeure Clause?

In addition, you should take a look at the contract and see if there is a force majeure clause. A force majeure clause essentially protects against the penalties of a breach-of-contract situation if the reason for the breach of contract could not have been anticipated. 

This has become a significant issue during the coronavirus pandemic. A lot of companies have been unable to deliver on their promises because of serious supply chain issues created by lockdowns during the pandemic. Contracts that had a force majeure clause in place could protect companies against the penalties of a breach-of-contract situation.

Most companies could not have anticipated a global pandemic interrupting their operations, so they might be protected in a breach-of-contract situation. 

5. Are All Contractors Licensed and Insured?

As a stipulation in the contract, you may require that all contractors are properly licensed and insured. The exact implications of this can vary depending on the industry in which the contractors work. Licensing is important because it demonstrates the contractors have a certain level of expertise.

Insurance is important because it protects the company and the client against a potential disaster. Even though you do not think something will go wrong, you never know what will happen. Having insurance protection is important because the policy could cover the cost of any damage stemming from an accident. 

6. Is There an Exclusivity Clause?

You should take a look at the contract and see if there is an exclusivity clause. There are some situations where this might be appropriate, and other situations where it is not. Essentially, an exclusivity clause states that you are not able to hire another company to do the same work being completed by the first company.

For example, if one company is taking too long, you may want to hire another company to take care of it. If there is an exclusivity clause, you may not be allowed to do this. Work with an attorney who can help you understand the implications of this clause.

7. Are Both Parties Entering Into This Agreement of Their Own Free Will?

Finally, you need to make sure that both parties are entering into this agreement of their own free will. You need to make sure that everyone understands the implications of the contract, nobody is being forced into the contract, and everyone is signing of their own volition.

If it can be proven that one party was pressured into signing the agreement, or that one party was not able to understand the implications of the contract, then the contract might not be legally enforceable.

Trust Aaron Delgado and Associates For Help With Commercial Contracts in Florida

Before you sign a commercial contract in Florida, you need to make sure an attorney with experience in this area reviews it on your behalf. At Aaron Delgado and Associates, it would be our pleasure to review commercial contracts for you. We can provide you with our recommendations, and we can explain everything in a way you can understand. Contact us today for a case review.

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