Contractual disputes rarely arise from obscure or highly technical provisions. Instead, they are most often triggered by everyday clauses that businesses assume are straightforward—until something goes wrong. At Frei Solicitors, we routinely advise companies, investors, founders, and international businesses on resolving contract disputes and strengthening their commercial agreements to prevent conflict.
Below, we outline the contract clauses that most frequently lead to disputes, litigation, and costly commercial breakdowns.
1. Ambiguous Scope of Work (SOW) and Deliverables
A poorly drafted Scope of Work is a primary source of conflict. Disputes arise when the contract does not clearly specify:
- What is being delivered
- By whom
- To what standard
- Over which timeframe
- Including or excluding which tasks
Why does it cause disputes
Ambiguity leaves each party with a different interpretation of the agreed terms. This often leads to claims of incomplete performance, additional fees, or delays.
Best practice:
Define deliverables precisely, with milestones, acceptance criteria, and objective performance standards.
2. Payment Terms and Pricing Structures
Payment disputes are among the most common in commercial contracts. Issues typically relate to:
- Milestone vs. lump sum payments
- Late payment triggers
- Withholding rights
- Variable pricing or indexation
- Additional or change order costs
Key risk
Where price adjustments or extra charges are not clearly defined, businesses easily fall into disagreement—especially in long-term or international contracts.
Best practice:
Include detailed payment schedules and explicit mechanisms for fee variations or additional work.
3. Termination Clauses and Exit Rights
Termination clauses are often misunderstood or too vague, leading to conflict when one party seeks to exit.
Typical issues include:
- Unclear notice periods
- Ambiguous “material breach” definitions
- Termination for convenience vs. for cause
- Consequences of termination (fees, handover, IP rights)
Why it matters
If termination rights are unclear, one party may believe they can walk away while the other may treat this as wrongful repudiation, triggering damages.
Best practice:
Draft specific termination triggers, notice requirements, and post-termination obligations.
4. Confidentiality and Non-Disclosure Obligations
Confidentiality disputes frequently arise from:
- Vague definitions of what is confidential
- Poorly drafted exclusions
- Unclear duration of obligations
- Ambiguous consequences of breach
Common scenario
A party claims information was public or already known, undermining the confidentiality obligation.
Best practice:
Define confidential information precisely, and include enforcement mechanisms, damages, and injunctive relief clauses.
5. Intellectual Property (IP) Ownership and Licensing
IP issues are especially common in:
Tech development contracts
- Creative and marketing agreements
- Joint ventures
- Consultancy arrangements
Typical disputes relate to:
- Who owns the work product
- Whether rights are assigned or merely licensed
- Ownership of pre-existing IP
- Rights after termination
Key risk
If IP rights are not definitively assigned, both parties may claim ownership, leading to costly legal disputes.
Best practice:
Include unambiguous IP assignment clauses and specify rights to use pre-existing materials.
6. Liability Limitations and Indemnities
Indemnity and liability clauses generate conflict when:
- Liability caps are unclear
- Exclusions for indirect or consequential losses are misunderstood
- Parties disagree on what losses are recoverable
- Indemnities are drafted too broadly or narrowly
Why disputes occur
These clauses define financial exposure. Poor wording can leave one party unexpectedly liable.
Best practice:
Use precise, industry-appropriate liability caps and clearly define indemnified losses.
7. Non-Compete, Non-Solicit, and Restrictive Covenants
Commercial disputes frequently arise over restrictive clauses relating to:
- Competition
- Client solicitation
- Poaching employees
- Using proprietary business models or data
Key problem
If the restrictions are overly broad, unenforceable, or unclear in scope, disputes and litigation are almost inevitable.
Best practice:
Draft restrictions narrowly, with clear timeframes, geographic scope, and protected interests.
8. Force Majeure and Change of Circumstance
Events such as geopolitical disruptions, supply chain failures, or pandemics trigger disputes over:
- What qualifies as a force majeure event
- Suspension vs. termination of obligations
- Notice requirements
- Mitigation duties
Why disagreements arise
Force majeure clauses often contain vague or outdated definitions that do not reflect modern business risks.
Best practice:
List specific qualifying events and define the exact consequences for contractual performance.
9. Dispute Resolution and Governing Law Clauses
Ironically, even clauses designed to resolve disputes frequently create them.
Problems arise when:
- Jurisdiction is unclear
- Arbitration vs. litigation is ambiguous
- Multi-jurisdiction contracts conflict
- Choice of law contradicts regulatory requirements
Risk
Poor drafting can delay proceedings, increase costs, or invalidate parts of the contract.
Best practice:
Specify governing law, dispute resolution forums, exclusivity, and procedural rules with precision.
How Frei Solicitors Helps Prevent and Resolve Contract Disputes
Frei Solicitors provides end-to-end contract support, including:
- Drafting and reviewing commercial agreements
- Identifying risk areas before contracts are signed
- Negotiating clauses to protect your commercial interests
- Dispute resolution and litigation support
- Redrafting problematic legacy contracts
- Corporate governance and risk‑mitigation strategies
Our team ensures your contracts are clear, enforceable, and aligned with your commercial objectives, reducing risk, preventing disputes, and strengthening business relationships.
