Even a well-intentioned contract can lead to costly disputes if it contains vague or poorly worded clauses. Some terms are more likely than others to cause confusion or disagreement between the parties. Understanding which contract clauses often lead to conflict—and why—can help businesses draft better agreements and reduce the risk of legal trouble.
One common flashpoint is the payment clause. When the timing, method, or conditions for payment are unclear, disagreements are likely to arise. For example, stating that payment is due “upon completion” without defining what counts as completion leaves the door open to interpretation. Conflicts also occur when contracts lack details about late fees, installment schedules, or what happens if one party defaults on payment.
Termination clauses also create friction. If a contract doesn’t clearly state under what circumstances it can be ended—and what the process looks like—parties may disagree about when and how a contract can be lawfully terminated. This is especially true in long-term business relationships where conditions may change over time.
Another area of frequent dispute involves indemnity and liability clauses. These provisions determine which party is responsible for damages or losses, and they must be drafted carefully. A one-sided indemnity clause that unfairly shifts risk to one party can lead to resentment, legal challenges, or contract breakdowns.
Non-compete and non-solicitation clauses can also spark disputes, especially when they are overly broad. Courts may strike down these clauses if they are seen as unreasonable or unenforceable, particularly if they restrict someone’s ability to work or compete unfairly. A well-balanced clause is more likely to withstand legal scrutiny and avoid a courtroom fight.
Lastly, dispute resolution clauses can either prevent or cause conflict, depending on how they’re written. If a contract requires arbitration in a distant location or calls for procedures that are too expensive or complex, it may discourage one party from asserting their rights or create unnecessary barriers to resolution.
To reduce the chance of dispute, contracts should be tailored to the specific business arrangement. Avoid copying boilerplate terms without evaluating whether they make sense for the particular situation. Always define key terms, outline clear procedures, and include fair terms for both sides. Having a legal professional review contract language before signing is one of the best ways to avoid future disagreements.
When businesses understand which clauses are most likely to cause problems, they can draft better contracts that protect their interests and support lasting, successful partnerships.