Entire agreement clauses
Entire agreement clauses provide that the contract in question constitutes the entire agreement between the parties which means that it supersedes any prior contracts or understandings between the parties. The entire agreement clause is helpful in avoiding disputes because it means that one party or the other is unable to argue that something that they said or did prior to the agreement being signed is relevant in construing their obligations under the contract. However, care needs to be taken to ensure that an entire agreement clause is what the parties want. Sometimes emails or correspondence between the parties prior to the agreement or documentation produced by the parties does need to be part of the agreement in order for it to make sense.
No oral variation clauses
It is common for contracts to contain a clause providing that they cannot be varied other than in writing, signed by both parties. Again, these clauses serve a valuable function and ensure that one party to the contract cannot claim that an oral variation has been agreed when that is not true. The enforceability of oral variation clauses has historically been a grey area the argument being that parties cannot agree not to vary a contract orally, because such an agreement would be destroyed automatically upon oral variation. However, in 2018, in Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24 the Supreme Court put the matter beyond doubt and said that "no oral variation" clauses were valid. The natural inference from a failure to observe such a clause was not that the parties intended to dispense with it but that they had overlooked it. If they knew it existed and varied the contract without writing then they did so knowing that they were breaching the contract.
While it is difficult to envisage circumstances in which anyone would wish to dispense with this particular clause, it needs to be specifically drawn to the attention of clients given the state of the law and its effect.
Severability
Typically a contract will contain a clause which provides that if a clause or clauses of the contract are held as unenforceable or void then that invalidity will have no effect on the rest of the contract. In other words, the clauses in question would be severed from the contract leaving only the valid provisions. Again, much like with "no oral variation" clauses it is difficult to see any reason not to include a severability provision in most contracts. However, they are not some sort of panacea and instead consideration will always need to be given to whether the unenforceability of a particular clause or clauses will, in any event, make the remainder of the contract void.
Jurisdiction
Scotland is a good place to litigate and an inexpensive place compared to England & Wales. The cost (i.e. court dues) of lodging a summons in a high value action in the Court of Session in Edinburgh is £313. The cost of lodging a claim in the High Court in London is £10,000. That alone ought to give contract drafters pause for thought as to the best choice of forum in the event of a dispute. Otherwise, commercial actions in Scotland are cost-effective, comparatively quick and run by specialist judges with commercial experience. So, if you are a corporate lawyer and you are about to draft a jurisdiction clause, before you default to London as the place to litigate, take a deep breath and think of somewhere closer to home.
Arbitration
The question for contract drafters to ask in this regard is this - what do you actually know about arbitration? If you have had a wonderful experience arbitrating and you think that any parties in dispute should eschew the oversight of the courts and immediately appoint an arbitrator then by all means put an arbitration clause in a contract. If not, then perhaps further thought needs given before inserting one. Arbitrators charge for their services and judges do not. Arbitration tends to be no less quick and no less expensive than litigation and the quality of decisions at arbitration is variable. There is no system of precedent so a decision in one arbitration may differ significantly from a decision in another despite having largely the same facts and involving the same law. There are undoubtedly benefits to arbitration such as confidentiality and, in some technical cases, a decision-maker with technical expertise. However, arbitration clauses should not be inserted automatically.
Alternative Dispute Resolution
At the risk of suggesting a lack of imagination on the part of contract drafters, why do parties always need to subject themselves to litigation or arbitration as a first step in a dispute resolution process? For some time now, business has been looking at more innovative ways of resolving disputes and ways which allow the parties to maintain a business relationship with each other. Mediation has been at the forefront of this. Mandatory mediation is a radical idea because mediation often will not work unless both parties are willing (even if they are not ultimately able) to resolve their dispute amicably. But by the same token, some parties will never mediate unless they are forced to do so. An element of compulsion in settling disputes amicably may, in certain circumstances, be preferable to other compulsory dispute resolution procedures. So again, a little innovation in the standard boilerplate may be no bad thing.
