Commonly Overlooked Contract Clauses

March 30, 2022

As part of our practice, we draft and review contracts for businesses in many different industries. Despite the differences in industries, there are many common types of contract provisions. It is a good idea to review your contracts to make sure that you understand every aspect of what you are agreeing to.


For instance, a common clause in any business-related contract is a Choice of Law provision. What is a Choice of Law provision? A Choice of Law provision is an agreement between the parties as to which laws will apply in the event of a dispute. While it may seem like “boilerplate” contract language, and therefore not essential to the agreement, this clause can actually be very significant. As upper management and business owners are aware, sometimes laws differ between states. The laws of one state may be more favorable to one side of the contract than the laws in another state. Further, Choice of Law provisions are also usually accompanied by an agreement as to the forum where any potential dispute would be resolved. This is also a very important clause. If you are a Massachusetts business doing business with a company in California, such a forum selection clause could require you to engage in litigation in California in the event of a dispute. Such far reaching litigation would potentially have an impact on your ability to pursue relief and/or defend the action.

   

Another common contract provision that follows the Choice of Law provision is the legal concept of “damages”. Generally speaking, if one party breaches the contract, the other side will be entitled to “damages” in order to compensate it for its loss. The legal theory behind damages is to make the non-breaching party whole by compensating them for their loss. However, sometimes the loss can be difficult to calculate. Therefore, some contracts contain what is called a “liquidated damages” provision. This is usually common in the construction industry. What are liquidated damages? Essentially, liquidated damages constitute an agreement that the parties have agreed as to what the “damages” will be in the event of a breach. You therefore want to be aware of this potential clause in a contract. Generally speaking, a “liquidated damages” provision is not enforceable if it is intended to be a penalty for breaching the contract, as opposed to being intended to make the non-breaching party whole. If you are relying on a liquidated damages provision, it is a good idea to consult with counsel to obtain an opinion as to whether or not such a provision is enforceable.


There are other standard contract clauses including attorneys fees, possible alternative dispute resolution, interest rates, default provisions, notice provisions, and more that can also be crucially important. We will discuss these more in coming blogs.


If you have any questions regarding commercial contract related issues, please do not hesitate to contact the attorneys at The Royal Law Firm, LLP.

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Friday April 18th: Amy Royal, Fred Royal, and Derek Brown attended the Springfield Thunderbirds playoff game! They enjoyed watching the Thunderbirds play the Charlotte Checkers from the Executive Perch.

Massachusetts Wage Act: Not Even a Single Day Delay

April 18, 2025
Employee's Wage Act Claim Case Overview : In Turgut v. Hitachi Rail STS USA, Inc., Plaintiff filed a putative class action against a company, Defendant, alleging violation of the Wage Act by not paying wages within six days of the pay period's end. Defendant argued that its employees fell under the exception that allowed seven days for payment; however that exception only applies to hourly workers that work all seven days of a work week. The plaintiff is looking to represent a class of employees that received W-2 wages in what he alleges was in an untimely manner. The case was originally filed in state court on February 20, 2025 but was moved to federal court. Reason for Treble Damages: Under Rueter v. City of Methuen, the seminal case regarding the Massachusetts Wage Act (“Wage Act”), the proper measure of damages under the Wage Act is treble damages. Previously employees were only entitled to interest on the unpaid wages if the company paid before proceedings started. It kept noncompliance from being as costly as it is now. Currently any violation can be subjected to treble damages for the total amount of the alleged late payment. It’s expected that we will see more cases pick up by attorneys because the treble damages make it worthwhile for their clients as well as themselves, given this recent ruling. Judge's Ruling : The Judge ruled that the six-day deadline applies. The Judge stated that while the complaint didn’t make it clear if plaintiff is hourly or salary, plaintiff only worked five days a week, meaning that the seven-day exception did not apply as the Wage Act was written. Legal Implications Legislative History : The Wage Act provides different deadlines for an employee’s final pay based on the number of days worked in a week. This case also emphasizes that having salaried workers on staff does not fulfill the requirement of having employees work seven days a week. Significance of One Day : The judge emphasized that even a single day's delay in payment can significantly impact employees living paycheck to paycheck. What Employers need to know Make sure you’re aware of your employees’ pay cycle and make compliance a company priority. It’s more cost effective to pay a day or two earlier than it is to head to court over claims of violations. This ruling expands on the Reuter ruling by clarifying the Wage Act rules in relation to hourly employees. If an hourly employee resigns, ensure that automatic payment systems (as well as the employer’s own internal pay systems) are aligned with the requirements of this ruling. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.