November 3, 2023

How Commercial Agreements Impact Your Business

In the business landscape, commercial agreements help define and maintain relationships. Therefore, formulating commercial contracts requires the utmost precision and care to prevent legal conflicts. That’s where commercial agreement lawyers in Perth will come to your aid and ensure that these legal documents are not drawn up poorly.

But have you ever wondered about the role and impact of commercial contracts in your business? Scroll through this article to learn more about commercial contracts and how they can influence your business.

Understanding the Concept of Commercial Agreements

The easiest way to describe commercial agreements is to call them legally enforceable contracts. These documents define what the parties signing the contract are legally allowed to do and what they should refrain from. A business law lawyer can draw commercial agreements of businesses with other businesses or individuals.

Commercial agreements are usually made in written form so that they are easier to enforce. Any written commercial contract will provide clear guidance regarding how the involved parties are supposed to fulfil their obligations. But in rare cases, commercial agreements can also be drawn verbally.

Commercial Agreement Examples

Commercial contracts have a massive role to play in the success of your business. No business can thrive without support from other individuals or businesses offering critical services to perform different operations. Therefore, hiring commercial agreement lawyers in WA is often a necessity for businesses. Some typical examples of commercial agreements that these legal professionals can draw up are as follows:

  • Purchase and sales agreements: These are basic commercial contracts covering one party’s agreement to purchase goods from the other involved parties. A purchase and sales agreement will include details about the quantities and types of goods needed. Additionally, the date and time of delivery and the line of action in case of unavailability are also present.
  • Distribution agreements: These agreements throw light on how goods are transported from the production department to the end consumers. A distribution agreement will distinctly outline the duties of the distributor as well as the production company.
  • Service Agreements: A service agreement is signed when one party agrees to offer services to another. For instance, your company might sign an agreement with a dry cleaning company which makes them come to your premises once a month for cleaning.
  • Production Agreements: A production agreement is signed when one party needs a product and the other party agrees to manufacture it. These agreements offer details about the course of action when something goes wrong during the production process.

The Impact of Commercial Agreements on Your Business

High-growth companies end up signing a large number of great deals with guidance from the best commercial agreement lawyers in Perth. These legal professionals can formulate and implement commercial agreements that track, observe, and analyse the various obligations of the involved parties. As a result, the complexities of maintaining a record of every obligation become easier for businesses. Keep reading to understand the other positive impacts of commercial agreements in a business landscape:


  • Creating Objectives and Establishing Expectations


Commercial agreements clearly define the expectations of every party signing it. All the agreed-upon terms are elaborated in these legal documents. Additionally, these contracts help with the fulfilment of requirements and provide businesses with a comprehensive legal defence.


  • Brings Professionalism in Business Operations


A legally drawn commercial agreement makes every involved party acquire complete responsibility for any violations of the agreed-upon terms. By setting up a paper trail, commercial contracts can foster trust and reliability. As a result, the involved parties in a business transaction appear more legitimate and efficient.


  • Facilitates Deals Beyond Geographical Boundaries


If your business wants to get involved in cross-border or multi-jurisdictional deals, drawing up commercial agreements will help facilitate them. These contracts promote the utilisation of a strong framework for success and remove common complexities associated with deals beyond geographical boundaries. Consequently, these agreements can help businesses foster improved relationships with clients.


  • Eliminating Contract Risks


While performing high-value commercial transactions, a business remains likely to face significant risks. To avoid the effects of this, it is essential to have a thorough understanding of the commercial transaction laws in WA. And Businesses with a commercial contract in place find it easy to deal with losses. These contracts can help build formal relationships and protect the interests of businesses. Therefore, commercial agreements can also be great for compliance.

The Clauses Added in Commercial Agreements

Commercial agreements are useful for throwing light on the deliverables of involved parties. These legal documents will incorporate payment terms, transaction details, price, date, and goods or services exchanged. While the exact structure of every commercial contract is different, some common clauses added to them are as follows:


  • Dispute Resolution


A dispute resolution clause will clearly outline the way the involved parties will tackle disputes in the event of a conflict. This clause in commercial agreements helps companies avoid litigation. Instead, a dispute resolution clause allows businesses to submit arbitration.


  • Confidentiality


The confidentiality clause is a way for parties to hide sensitive information from the common folks. Adding this clause to a commercial agreement will make unauthorised disclosure of confidential information unlawful. Confidential information can be about business dealings, intellectual property, and more.


  • Termination


A termination clause clearly defines whether parties can end the contracts during a breach or acquisition. Terminating a contract will free the involved parties from all their legal obligations. This clause also sheds light on the circumstances that can lead up to termination.


  • Damages


This clause will talk about the damages in the event someone breaches the contract terms. In most cases, a trespasser will be owing a specific amount along with other damages.


  • Force Majeure


This clause defines the line of action when an involved party is unable to complete their obligations due to reasons beyond human anticipation and control. For instance, some of the involved parties might fail to complete their duties due to a natural calamity or any other catastrophic event. In such situations, failure to fulfil contract terms won’t be viewed as a breach.


  • Jurisdiction


We have already mentioned that commercial agreements are often drawn to facilitate cross-border transactions. In the case of transactions involving multiple jurisdictions, a commercial agreement needs to explicitly mention the law of which jurisdiction will govern it. With every state or nation operating on a distinct set of rules, a jurisdiction clause brings transparency and delivers legal protection.


  • Indemnity Clause


The indemnity clause is one of the most debatable provisions in commercial agreements. This clause serves as a promise by a contracting party to shield the other party against liabilities. These liabilities include those arising from the indemnifier or contracting party’s negligent actions, third-party actions, or breach of contract.

It can be said that the addition of the indemnity clause in a commercial agreement can help transfer liability from one party to another. The indemnity clause permits the following:

  • Limiting the amount of risk you expose yourself to in all transactions
  • Shift liabilities to the party most likely to bear them (usually the party with greater control in the transaction)

Wrapping up

If you need assistance in drawing up commercial agreements, the experts at Business Settlement Lawyers Perth will cater to you. We have vast experience in helping businesses develop agreements for business contracts at an international level. So, contact our expert team of business settlement lawyers today!