Many commercial disputes that reach the courts would never have arisen had the contract addressed a few simple matters instead of leaving them to silence. Below are the clauses we recommend in every agreement.
1. Governing law
In contracts with an international element, the governing law is the first question examined once a dispute arises. Leaving it unstated opens the door to conflict of laws and lengthens proceedings.
2. Forum for disputes
Will the dispute go to the Iraqi courts or to arbitration, and before which arbitral institution? Clarity here saves months of procedural argument.
3. Delay penalties
The penalty rate should be defined and capped, with the method of calculation and the date it begins to run set out expressly.
4. Force majeure
Define which events qualify, their effect on each party's obligations, and the period after which either party may terminate.
5. Termination mechanism
Termination without an agreed mechanism usually becomes a lawsuit. Set out the grounds, the notice period and what each party owes afterwards.
A good contract is not the one that wins the dispute, but the one that prevents it.
