CBN Contract Clause Drafting 2

Question 1

Which clause type specifies the consequences if a party fails to meet a contractual deadline?

Accepted Answer

Time-is-of-the-essence clause

Answer

A time-is-of-the-essence clause makes contractual deadlines material terms, so missing them constitutes a breach.

Question 2

In drafting a limitation of liability clause, which approach best protects both parties?

Accepted Answer

Cap liability at the total contract value paid in the prior 12 months

Answer

Capping liability at total contract value paid over 12 months is commercially reasonable and more likely to be enforceable.

Question 3

What is the primary purpose of a representations and warranties clause in a commercial contract?

Accepted Answer

To allocate risk by having each party attest to factual statements about themselves

Answer

Representations and warranties allocate risk by requiring each party to confirm specific facts as true at the time of signing.

Question 4

A 'most favored nation' (MFN) clause in a supply agreement guarantees that:

Accepted Answer

The buyer receives the same pricing as the seller's best customer

Answer

An MFN clause ensures the buyer will not pay more than the seller's most favorable customer for comparable goods or services.

Question 5

When drafting a non-solicitation clause, which element is most critical for enforceability in the US?

Accepted Answer

Defining a reasonable time period and specific categories of protected individuals

Answer

US courts routinely invalidate overbroad non-solicitation clauses; reasonable duration and clear scope of protected persons are essential.

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