A contract clause is a specific provision or section within a written contract.

Each clause in
a contract addresses a specific aspect related to the overall subject matter of the agreement. Contract
clauses are aimed at clearly defining the duties, rights and privileges that each party has under the
contract terms. Clauses can be located in various places in the contract, but most of the time they appear
towards the end of the document.

Contract clauses can take many forms and can cover nearly aspect of business and commercial interests. A
common example is a non-disclosure clause in an employment contract, where the employer agrees not
to disclose any confidential information belonging to the company.  Contract clauses are enforceable
along with the rest of the contract under state and federal laws.

What Are Some Common Clauses in a Contract?

The use of various clauses all depends on the needs of the parties. Some clauses appear more frequently
in contracts than other ones. There are “boilerplate” clauses that may appear as a standard part of some
business contracts. Or, the parties may create specific clauses that are tailor-made for each contract with a
client. 

Some common contract clauses include:

 Choice of Law / Forum Clause: In these types of clauses, the parties agree that the contract terms
will only be interpreted according to the laws of a specific state. Also, they may agree that litigation will
only occur in a specified jurisdiction. These are only enforceable if they don’t conflict with general
requirements of law.
 Statute of Limitations Clause: These state the time frame in which a lawsuit can be filed after a
breach of contract or other violation. Again, such clauses can’t violate already existing laws and filing
requirements. 
 Time of Performance Clause: These indicate the time frame in which the contract duties can or
can’t be performed. Some contracts state that “time is of the essence”, meaning that a breach of contract
suit can be filed if the duties aren’t performed in a reasonable amount of time.
 Merger Clause: A merger or integration clause states that the current written contract overrides
any previous oral or written agreements.
 Indemnification Clause: These agreements indemnify (release from liability) the other party in the
event that losses or expenses are incurred. These should be used with caution, as they could limit the
ability to recover damages for losses
 Non-Waiver Clause: These protect parties who excuse the other party for non-performance of
contract terms. For example, suppose one party only makes payments every other month when the
contract requires monthly payments. If the non-breaching party accepts the payments but doesn’t file a
lawsuit, the non-waiver clause allows them to recover the missing payments. In other words, the party
doesn’t “waive” their full contract rights by accepting non-complying action from the other party.
 Severability Clause: This ensures that the remainder of the contract is enforceable even if one part
of the contract is determined to be invalid. Without such a clause, it’s possible for the entire contract to be
invalidated by the court if only one provision is found to be invalid. Also called a savings clause.


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