Commercial Contracts - The Document That Writes a Business Relationship for the Day the Relationship Breaks Down
A business contract answers two different questions: how we work together while everything is fine, and what happens when it is not: delivery is late, the price changes, exclusivity is breached, the software does not work, the counterparty is in another country and the contract says nothing about who sues whom and where. Templates from the internet and the counterparty's "standard terms" answer the first question; a lawyer's contract answers the second.
This page describes the types of commercial contract and their critical clauses: how supply differs from distribution and agency, what a franchise and an IT contract must provide for, how a limitation of liability and force majeure are drafted, which clause is essential with a foreign counterparty, and how a lawyer audits a company's templates so that not one contract but the business's whole contract base is protected. Litigating a breach of contract is on a separate page.
Updated · Practice area: Corporate lawyer
Types of Commercial Contract - What Each Governs and Where the Typical Risk Lies
The same business relationship can take different legal forms, and the form determines the obligations, the liability and the tax.
Drafting and Negotiating a Contract - From Business Logic to Signature
Understanding the business logic
Who gives what, for how long, at what price, what the main risk is for each side and what happens when the relationship ends. The lawyer writes the contract from the business scheme, not from a template; the template is a tool afterwards, not the starting point.
Structure and choice of type
One contract or a framework plus orders, distribution or agency, licence or assignment. The choice changes tax, liability and competition law constraints; an agent does not become a distributor by "renaming".
Allocating risk
The core of the contract: who answers for delay, defects, third-party claims, market changes, with what cap and what exceptions. The limitation of liability (a percentage of contract value, exclusion of indirect loss) and the balance of penalties are the main subject of negotiation.
Termination and exit scenarios
A contract is read most closely at termination: grounds and notice for early termination, compensation, the fate of stock and clients, a non-compete, transition obligations (data, documents, code). A "termination by agreement" clause is not a termination mechanism.
Dispute resolution and governing law
Court or arbitration, which one, in what language and under which law; escalation and mediation before a claim. With a foreign counterparty this clause determines the contract's value: a judgment that cannot be enforced in the counterparty's country is paper.
Negotiation and signature
Analysing the counterparty's comments by risk (what can be conceded and what cannot), the final version, checking the signatories' authority (registry, power of attorney, joint representation), the validity of electronic signatures. After signing, "managing" the contract: a calendar of deadlines and notices.
A Contract With a Foreign Company - Three Clauses Without Which the Contract Cannot Be Enforced
A contract with a partner abroad raises three extra questions that a domestic contract does not: which country's law applies, where a dispute is decided, and how a judgment is enforced in the counterparty's country. The choice of governing law changes the content of the clauses: in some systems penalties are restricted, in others the limitation of liability works differently; the lawyer chooses the law to fit the structure of the contract, not on the logic of "ours is more comfortable".
The forum: a Georgian court judgment requires recognition in many countries, which is slow or impossible, whereas an arbitral award is enforced in more than a hundred countries under the New York Convention. That is why an arbitration clause is standard in international contracts, naming the institution, seat, language and number of arbitrators. A vague clause ("disputes are resolved by arbitration") becomes a dispute in itself.
And the practical elements: currency and the payment scheme (letter of credit, bank guarantee, escrow), the Incoterms term for delivery of goods (who is responsible for transport, insurance and customs, and from which moment), language and the priority of translations, sanctions and export control compliance. The lawyer checks with a colleague in the counterparty's country that the contract works there as it does here.
The Clauses Commercial Contract Disputes Are Born From
- Limitation of liability
- A maximum sum (the contract value or a percentage of it), exclusion of indirect loss and lost profit, exceptions (intent, breach of confidentiality, IP). Without a cap a service provider answers for the client's entire business loss.
- Penalties
- A daily percentage for delay with a cap, a fixed sum for breach; a mutual balance. A clearly disproportionate penalty is reduced by the court; a realistic amount is more enforceable than an "intimidating" one.
- Force majeure and price review
- A list of force majeure events, the notice period and the consequence (suspension, termination after a period); separately, a material change of circumstances clause (exchange rate, raw material prices, regulation) providing for renegotiation of the price. Force majeure does not cover a price rise.
- Intellectual property
- Who owns the result created (code, design, content): assignment or licence, and to what extent; the right to use existing IP; use of the brand after termination. The most often "forgotten" clause in IT and marketing contracts.
- Confidentiality and data
- What is confidential, the term (often beyond the contract), exceptions, a penalty; the rules for processing personal data under the law if the counterparty receives data.
- Amendments and notices
- Amendments only in writing (does email count?), notice channels and addresses, how deadlines are counted. A contract "amended" in a chat goes to court in both versions.
What the Lawyer Checks in a Company's Contract Base
- The company's templates with clients and suppliers: do they have a limitation of liability, a termination mechanism, a dispute clause, IP and confidentiality; if not, every contract is an open risk.
- The counterparties' "standard terms" the company signs regularly: which clauses are acceptable and which must be changed every time.
- A register of current contracts with terms, automatic renewals and termination notice periods; a missed deadline extends a contract by a year.
- Signatories' authority and procedure: who, up to what amount, with what consent; the director's limit of authority under the charter.
- The validity of electronic contracts: form of signature, platform, storage, as evidence for court.
- Compliance: consumer rights in B2C contracts, competition law in distribution, personal data, sanctions in international contracts.
Three Commercial Contract Cases
A distributor whose exclusivity was "forgotten"
A Georgian company developed a European brand for 4 years on verbal exclusivity; the manufacturer appointed a second distributor. Lawyer: there was no exclusivity in the contract, so the claim rested on correspondence, investment and good faith; negotiation on compensation for the investment and a buy-back of stock. Partial compensation; written exclusivity would have settled it in full.
An IT company and code that "belongs to the client"
A developer built a platform for a client; the client demanded full assignment of the code, while the developer wanted the platform for other clients too. Lawyer for the developer: the contract had no IP clause, so by the statutory rule the result passes to the client with limits; negotiation to a licence model: the client exclusive in its industry, the developer keeping the core. A new template for every future client.
A foreign buyer and the clause "disputes are resolved by arbitration"
A Georgian exporter delivered 380,000 dollars of goods; the buyer did not pay part; the contract said "arbitration" with no institution or seat. Lawyer: interpretation of the clause, establishing an arbitral institution's jurisdiction, enforcement in the buyer's country under the New York Convention. 14 months on the clause dispute; a proper clause would have gone straight to the merits.
Questions About Commercial Contracts
The counterparty offers its template and says "everyone signs this". What should I check?
Five clauses: limitation of liability (is it one-sided?), the termination rule (who and how), the dispute forum and law (in their country?), automatic renewal and the right to change the price, IP and confidentiality. "Everyone signs" often means everyone takes the same risk. A lawyer's one-hour audit of the template: a few clause changes that restore the balance.
Are terms agreed by email and chat a contract?
They can be, if the essential terms (subject, price, term) were clearly agreed and the parties are identifiable. The problem is proof: which message was final, who wrote it and whether they had authority. The lawyer advises: essential terms in one signed document (electronic is fine), chat for operational matters.
I am a franchisee and the franchisor changes the terms unilaterally. Is that lawful?
Only within what the contract allows: updating standards and the manual is often the franchisor's right, changing the price and territory is not unless expressly stated. Franchise agreements are written in the franchisor's interest; a lawyer's audit before signing of the unilateral change, termination and non-compete clauses is decisive.
Which law should we choose in a contract with a foreign partner: Georgian?
Not automatically. Georgian law is convenient for a Georgian court, but if the dispute goes to arbitration or to the counterparty's country, another law may be more predictable. The criterion: where the decision will be enforced and which law allows the contract's clauses (cap, penalties) to be enforced. The lawyer chooses law, forum and enforcement together.
Our contracts are 10 years old and "work". Why should we change them?
Because "work" means no dispute has happened yet. The law has changed (consumer rights, personal data, competition, electronic signatures), the business has grown and the risks with it. An audit does not mean re-signing every contract; it means a new template for future contracts and a supplementary agreement on critical clauses with major counterparties.
Lawyers for Commercial Contracts
A commercial contract is a combination of business logic, risk allocation and an enforceable dispute clause; a template does not provide that. Within 15 minutes the coordinator connects you with a lawyer who drafts and negotiates B2B and international contracts.
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