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Common Provisions Found in California Contracts

by | Apr 12, 2016 | Business Law, Commercial Real Estate, Real Estate Law


A contract clause is a specific section or provision included within a written contract. Each clause in a contract is included to address a specific piece of the overall deal being set down on paper. The contract clause is meant to clearly define the various duties, rights and privileges provided to different parties involved in an agreement as designated under the contract terms. In most contracts, these clauses can be found at the end. While the contract clause can be in many different forms and aimed at many different issues, there are common clauses or provisions often seen in California contracts.

Common Provisions in California Contracts:

Choice of Law/Forum Clause: in which the parties involved agree to contract terms being interpreted in accordance with the laws of the state and the litigation will occur only in specified jurisdictions. So long as this type of clause does not conflict with general requirements of the law, these clauses are enforceable.

Statute of Limitations Clause: in which the time frame is stated during which a lawsuit could be filed regarding any supposed breach of contract or violation related to the agreement (only enforceable so long as it is in accordance with existing laws and requirements for filing procedures).

Time of Performance Clause: in which the time frame is specified during which contract duties should or should be completed. Specifically stating that “time is of the essence” means that if the duties detailed in the contract are not completed in a timely manner, a breach of contract suit can be filed.

Merger Clause: in which it is specified that the current contract will override previous agreements or contracts.

Indemnification Clause: in which the other party is released from liability in the event that either losses or expenses occur. This type of clause can limit the ability to recover damages for losses and should be used with caution.

Non-waiver Clause: in which it is agreed that accepting non-complying action from one party does not prevent the other party from seeking enforcement of their full contractual rights.

Severability Clause: in which the remainder of the contract is determined to be enforceable even if a portion or section of the contract is found to be invalid. This is also sometimes referred to as a savings clause.

Arbitration Clause: in which it is agreed that legal disputes arising from the contractual agreement and associated duties/work will be resolved through arbitration and not litigation.

Liquidated Damages Clause: in which the non-breaching party is allowed to recover damages when actual damages are difficult to calculate so long as the amount is reasonable in connection to the specific circumstances.

Attorney Fees Clause: in which it is agreed that the losing party should reimburse the other party for attorney’s fees and other court fees and costs if necessary.

Enforcement of contractual clauses depends on the laws of the region. Parties generating a southern California contract can form clauses as necessary, but all must comply with existing laws and regulations. For assistance with your own business contract, please get in touch with the experienced southern California business attorneys at The Law Office of the Law Office of Ernesto Aldover.