Contract Clauses: Examples, Checks and a Review Worksheet

Contract clauses are individual provisions addressing parts of a deal, such as payment, confidentiality, risk or exit. Review their triggers and interaction, not just whether headings exist. This US business guide uses scoped federal and New York examples; the governing law and transaction determine what wording is enforceable.

Choose the review path before collecting clauses

New York’s UCC defines a term as a portion of an agreement addressing a particular matter. It also distinguishes the parties’ bargain from the resulting legal obligation. A clause inventory identifies wording; it cannot itself establish enforceability. New York UCC 1-201.

Use this as a review map for an actual draft. Identify the parties, transaction, governing law and incorporated documents before choosing sample wording. The goods rules below are named New York Article 2 examples, not rules for every service or employment agreement. New York UCC 2-106.

Coordinate payment, liability and claim handling

A proposed payment clause should specify the price basis, invoice requirements, due-date trigger, dispute route and responsible recipient. Test the interaction with acceptance, refunds and termination charges. A billing date and a contractual due date deserve separate entries in your review sheet.

Indemnification and liability limits

Indemnification review starts with covered claims, exclusions, defense control, settlement consent and notice. Ask whether defense costs sit inside or outside the liability cap. Do not infer the answer from a heading or assume that one clause overrides another. Put the actual cross-references in the reviewer’s packet.

For New York goods transactions, section 2-719 permits qualifying remedy limits but addresses failure of essential purpose and unconscionable consequential-damages exclusions. A stated cap or exclusive repair remedy is therefore not an unconditional assurance of maximum exposure. New York UCC 2-719.

Liquidated damages

A liquidated-damages clause proposes an agreed amount or calculation for a specified breach. Preserve the reasoning and expected harm rather than merely labeling a charge “agreed.” New York’s goods rule considers anticipated or actual harm, proof difficulty and adequate-remedy issues; an unreasonably large amount is void as a penalty. New York UCC 2-718.

Warranties and disclaimers

Warranty language (the warranty guide covers California) should be compared with the specification, sales promises and remedy clause. New York UCC 2-316 addresses inconsistent negation of express warranties and conditions on implied-warranty exclusions, including merchantability and conspicuousness, subject to its exceptions. Do not convert this goods rule into a universal services disclaimer. New York UCC 2-316.

Define information, restrictions and ownership precisely

Keep confidentiality, privacy operations and ownership questions separate. For data handling, record what information enters the service, who may access it, retention and deletion tasks, and the person who can approve the proposed process. A confidentiality heading does not answer those operational questions.

Confidentiality

Confidentiality terms should identify information, permitted purpose, recipients, exclusions and duration. For covered worker agreements, federal trade-secret law includes protected confidential reporting and sealed-filing routes, immunity notice and individual contractor/consultant coverage. Those protections have conditions and do not authorize unlawful access. Have the reviewer check the actual notice instead of adding a blanket prohibition. Trade-secret disclosure immunity.

Exclusivity

Exclusivity (the exclusivity guide covers California) needs a defined product, customer group, territory, duration and exception process. In lawful New York goods exclusive dealing, section 2-306(2) imposes best-efforts supply and promotion obligations unless otherwise agreed. Ask whether your draft changes those obligations; a restriction can create performance questions as well as prohibit another relationship. New York UCC 2-306.

Non-solicitation

Non-solicitation review should identify whom the restriction concerns, what conduct it covers and the actual relationship. Give licensed state counsel the proposed employee, customer or vendor restriction and business reason. Treat these as separate review questions; do not reuse one form across all three or approve it merely because its duration looks short.

Intellectual property

Identify existing materials, newly produced work, permitted uses, third-party components and the proposed ownership instrument. Federal copyright law generally requires a signed writing from the rights owner or authorized agent for ownership transfers other than by operation of law. Payment alone is not the writing described in that statute. Copyright transfer execution.

Read disruption, renewal and exit as a connected sequence

Use a timeline with distinct events: disruption discovered, notice delivered, cure or suspension period, exit decision, service transition and final account reconciliation. Do not enter every event under a single “termination date.”

Force majeure

Force majeure drafting should identify qualifying events, the affected obligation, notice, mitigation, temporary relief and any long-stop exit. The New York goods seller excuse in section 2-615 has qualifying conditions, assumed-obligation limits, allocation and seasonable-notification duties. It is not an automatic exemption whenever business becomes harder. New York UCC 2-615.

Automatic renewal

Evergreen clauses need separate renewal and nonrenewal-notice entries. For the property-related service, maintenance or repair contracts covered by New York GOB 5-903, the renewal provision is unenforceable against the recipient unless the provider gives written notice, served personally or by certified mail, 15 to 30 days before the recipient’s notice deadline. Renewal periods of one month or less are excluded. Check coverage before applying this rule to a subscription. New York General Obligations Law 5-903.

Termination for convenience

Convenience termination review asks who may exit without alleging breach, how notice works, which charges remain, and who completes the handover. Treat those as negotiated questions, not assumed entitlements. For New York Article 2, termination discharges obligations still executory on both sides but preserves rights based on prior breach or performance. New York UCC 2-106.

Survival

A survival schedule should connect each continuing task to its duration, owner and source clause: outstanding payment, protected information, retained records or claim handling. Avoid “everything survives forever” as a substitute for that analysis. New York’s goods termination rule already preserves the specified prior rights; your schedule should be reviewed alongside the governing law. New York UCC 2-106.

Check dispute mechanics and invalid-term handling

A review packet should separately identify governing law, proposed court location, arbitration provisions and notice mechanics. Ask the reviewer to reconcile overlapping procedures and emergency relief rather than selecting whichever clause appears last.

Governing law

Governing-law review begins with the named jurisdiction and transaction. New York GOB 5-1401 offers a particular route for transactions aggregating at least $250,000 to choose New York law without a reasonable relation, with listed exclusions. Its second subsection preserves other enforcement routes; the threshold is not a universal minimum for valid choice-of-law wording. New York choice-of-law statute.

Arbitration

Arbitration provisions should identify covered disputes, institution or rules, location, appointment and costs. Federal Arbitration Act section 2 addresses written provisions in specified maritime or commerce transactions, subject to general contract-revocation grounds and chapter 4. Do not promise arbitration is always cheaper, faster or unavoidable. Federal Arbitration Act section 2.

Severability

Severability language proposes how to handle invalid terms, but should not be presented as a guaranteed rescue. As one scoped example, New York UCC 2-302 permits refusing an unconscionable contract, enforcing the remainder without the clause, or limiting its application. The court’s options and commercial-context evidence matter. New York UCC 2-302.

Control the document set and the authority to change it

For an entire-agreement or document-priority clause, inventory the signed agreement, order, schedules and amendments. Flag sales assurances the business needs preserved in the final text. Record which document supplies each obligation; a tidy agreement title does not resolve inconsistent provisions.

For New York goods modifications, section 2-209 addresses consideration, signed-record restrictions, statute-of-frauds conditions and attempted changes operating as waiver. A “signed changes only” provision should therefore be reviewed alongside conduct and the statute, not treated as a complete answer. New York UCC 2-209.

Use a named change owner and version log as practical controls. For notices, record the method, address, trigger, required timing and retained delivery evidence. Operational approval to send a message and legal assessment of its effectiveness are separate tasks.

Complete a clause trigger, owner and evidence register

This fictional Cedar services agreement uses a negotiated notice cutoff of 5 November at 18:00 Eastern time. The parties propose email notice to the named contract address with delivery confirmation. Those are example terms, not statutory requirements or a completed agreement. The actual draft and governing law still need review.

Cedar’s calendar entry says “renewal: 1 December,” but its exit task depends on the earlier notice cutoff. The register below turns three connected clauses into tasks. If a delivery record shows 18:07, flag the seven-minute discrepancy; do not report timely completion merely because the scheduled send was 17:30. This example does not decide whether notice was legally effective.

Sample operational notice instruction, adapt after legal review

Agreement and version: [identify].
Clause and trigger: [quote the controlling text].
Required recipient and method: [fill from agreement].
Cutoff and time zone: [verify].
Sender and backup owner: [names].
Retain: notice contents, transmission and delivery evidence.
If timing or delivery differs from the plan, record the discrepancy and escalate. Do not mark the task complete from a scheduled-send screenshot.

Prepare a useful review packet and maintain the approved text

Give the reviewer the actual version, transaction facts, business priorities and completed register. Request decisions on specific conflicts. After approval, preserve the signed documents, clause version and operational owners; update the review record when the transaction, law or agreed wording changes.

The cited statutes do not supply one universal set of clauses for every US contract or approve the sample register. Sector, state and transaction-specific requirements need additional review. Avoid using a software extraction result as proof that a clause applies or that the right version was reviewed.

1. Identify every incorporated document and unresolved inconsistency.
2. Complete scope, payment, remedies and claim-handling cross-references.
3. Check information, ownership and restriction questions with the actual roles.
4. Separate renewal, notice, exit and continuing-task dates.
5. Give counsel state, transaction, proposed wording and the specific decision needed.
6. Preserve final text, approvals and trigger-owner-evidence records.

Frequently asked questions

What are contract clauses?

They are individual provisions addressing parts of an agreement. New York UCC 1-201 distinguishes an agreement’s terms from the total legal obligation. Identify the text first, then assess its effect under the relevant law. New York UCC 1-201.

What are the seven types of clauses?

For a practical review, use seven folders: performance, payment, information, risk, disruption and exit, disputes, and document administration. This is our organizing aid, not a statutory list or a requirement to include seven clauses.

What are the four types of contracts?

Contract-type labels answer different questions. Ask separately how agreement is evidenced, what is exchanged and what transaction law applies. A clause checklist is not a formation checklist; identify the actual bargain and governing rules. New York UCC 1-201.

What are the seven basic elements of a contract?

The cited sources do not establish a nationwide seven-element checklist. Give counsel the parties, assent, exchange, authority, purpose and writing evidence to assess formation under the relevant rules. Having a severability or governing-law heading does not answer that inquiry.

Are boilerplate clauses safe to reuse?

Treat approved wording as a starting point. Recheck its definitions, cross-references, governing law and operational fit in the new document set. Record who approved each departure and which version is final.

Does terminating a contract erase previous obligations?

Do not assume so. For New York Article 2, rights based on prior breach or performance survive termination, while mutually executory obligations are discharged. Review the actual exit and survival provisions with that scope in mind. New York UCC 2-106.

Can a disclaimer cancel every warranty or remedy?

No such conclusion follows from a heading. New York’s goods warranty and remedy provisions impose their own conditions and limits. Have the reviewer compare the promise, exclusion and proposed remedy together. New York UCC 2-316; New York UCC 2-719.

What should I do after finding conflicting clauses?

Save the exact version and both passages. Explain the business decision affected, identify the owner, and ask the authorized reviewer to resolve the conflict before execution or action. Keep the result in the version and task records.

Sources

• New York UCC 1-201
• Federal Arbitration Act section 2
• Trade-secret disclosure immunity
• New York UCC 2-306
• New York UCC 2-719
• New York UCC 2-316
• New York UCC 2-615
• New York UCC 2-718
• New York General Obligations Law 5-903
• New York UCC 2-106
• New York UCC 2-209
• New York UCC 2-302
• Copyright transfer execution
• New York choice-of-law statute

Related: Check the governing-law selection · Work through renewal notice windows · Define continuing duties