When a business is engaged in negotiations or signing an agreement, it is important to pay attention to the language and terms used. One such word is ‘exception’, which has significant legal and practical implications. It is essential to understand what an exception is and why it matters when negotiating business contracts.
What Is an Exception?
An exception, in terms of business law, is an instance where certain provisions included in a contract are not applicable. In other words, the terms of the contract have made a clear distinction between the circumstances in which one party will not be legally bound to its obligations. Common exceptions include violation of legal rights, changes in laws or regulations, or an act of God.
Why Does an Exception Matter?
Exceptions are important in business contracts because they provide a way to limit the liability of the parties involved in the agreement. Knowing the exceptions can help protect a business from financial losses or legal penalties that could arise due to an unforeseen circumstance. As an example, a contract may include an exception for damages caused by acts of terrorism or natural disasters. In such cases, the contractual obligations of each party would not be binding.
Bottom Line: Protect Your Business With Exceptions
When engaging in business negotiations or signing contracts, it is important to take into account the legal and practical implications of an exception clause. Knowing the right exceptions can protect your business from liabilities and unforeseen circumstances outside of your control. Being familiar with the exact language and meanings of an exception can help you make better decisions and be better prepared for any situation.