Quick Tip #1: Common Traps of Interrelated Clauses
We frequently see lawyers get caught out by interrelated clauses in a contract. This is when a single issue (such as limiting loss or termination rights) is impacted by various separate clauses in a contract. When drafting or negotiating contracts, pay special attention to the interplay between interrelated clauses to make sure that they speak to one another without contradicting or undermining each other. Don’t fall into the trap of thinking that a position is fine in one clause where there are other clauses in the contract which will have an effect on that clause. Time and again, we see contracts where several traps are set on purpose so that even if you win a reasonable negotiation outcome in one place, you still get caught out elsewhere. This type of error is unsurprisingly far more likely to occur when a lawyer is negotiating on the other side’s paper which they are not as familiar with. Even more so where the legal terms and conditions are negotiated separately to the statements or work or schedules. Lawyers are often only engaged to look at the ‘front end’ terms and conditions leaving the traps hidden in the operational or commercial content of the contract.
The important points to take away here are:
Be aware of all the clauses that have a bearing on the issue being negotiated
Ensure that any negotiated changes are carried through across these clauses
In the next three Quick Tips we will look at some examples of some of the common interrelated clauses and what to be aware of with each.