San Diego Business Contracts: No Other Agreements Clauses
A thriving San Diego business will have many and various commercial contracts that govern various aspect of the business. One common problem that must be avoided is that, with so many contracts, sometimes one contract might conceivably govern what is covered by another, preexisting contract. This situation does not imply bad intent, but rather, it is merely a function of many contracts, many employees, turnover in personnel, and contracts that may languish in a file somewhat forgotten.
Two situations must be avoided — overlapping contracts as between two parties and contracts covering the same transaction/asset with multiple third parties. An example of the former is a one-year service contract at $50 a month, but at the six-month mark another contract is executed between the parties for the same services at $75. An example of the second is sales leader Tiffany finds a customer for the shipment of widgets and enters into a sales agreement, but sales leader Maria finds a customer for the same shipment.
Sometimes bad intent and/or fraud is the problem. It is not common, but certainly there are examples of criminal-type attempts to do things like sell a house to more than one person. The movie and play called The Producers is premised to start on the idea that the producers of a theatrical production have sold more than 100% of the ownership in the play. To avoid discovery of their fraud, they must write a horrendous play that surely will flop after the first performance.
One way to avoid overlapping contract obligations is to have a good contract management and inventory system. See our discussion here. That is a fancy way of saying that your San Diego business should have a spreadsheet or database of all the company’s contracts. Remember, of course, that contracts govern not supplies and other customer-related aspects of the business, but also overhead and services. So, do not forget to include the utility contracts on the spreadsheet.
The other key to avoiding overlapping contract obligations is to hire an experienced San Diego corporate attorney who can help with contract management and who can also include contract language that minimizes any potential problems. That is what “No Other Agreement” clauses can accomplish.
A typical example might read like this:
“No Other Agreement. This agreement contains the only agreement between the parties relating to the transactions and matters set forth herein. This agreement shall have priority over any previous agreement — whether oral or written — between the parties relating to the transactions and matters set forth herein. Both parties represent and warrant that neither has entered into any agreement or agreements with third parties with respect to the transactions and matters set forth herein that would diminish or impair the rights and obligations set forth herein.”
Note that the clause avoids both types of overlapping contracts described above.
Contact San Diego Corporate Law
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard has been named a “Rising Star” four years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.