Contract Clauses: The Good, The Bad, and The Ugly

A contract is essentially nothing more than a long series of provisions detailing what can and must (or can’t and mustn’t) be done prior to, during, and/or after the conclusion of a business deal. Some provisions and clauses are standard operating procedure — phrases like “time of performance,” and “statute of limitations” appear again and again in contracts across dozens of industries. But every so often, less familiar provisions pop up — and they can range from the outrageously unfair to the plain bizarre.

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Bizarre Clauses and Provisions

 

1. Kill fee clauses. Kill fee clauses occasionally crop up in contracts with publishing companies. Kill fee clauses entail that an author be obligated to pay a publishing company a fee to “kill” their book, or pull it from distribution. At the reasonable end of the spectrum, a kill fee pertains to an author who is attempting to have a book pulled during the middle of its contractually specified distribution run — fair enough. But here’s where a kill fee can get hairy: at the end of a distribution period, a publisher may penalize an author with a kill fee for simply choosing not to renew a completed contract.

2. Hell or high water clauses. Legal language is usually less colorful, but this clause is exactly what it sounds like. As per the colloquialism, “Come hell or high water,” this type of clause forces one party to continue making payments to the other, regardless of any surrounding circumstances changing or difficulties ensuing. Defective shipment? Too bad — fork it over. Additionally, hell or high water contracts cannot be canceled.

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3. Good guy clauses. This is the only positive clause in this list. A “good guy clause” is most commonly found in lease agreements in large urban centers like New York, oftentimes with a small business as the tenant. It stipulates that, should a tenant have to leave their space before the term of the lease is up (usually because of financial difficulties, like the company going under), so long as they leave the space in good condition, the landlord will not take any legal or financial action against them.

4. Evergreen clauses. Evergreen clauses, also referred to as perpetual renewal clauses, also typically pertain to authors and publishing companies. Evergreen clauses have actually been called “virtual slavery,” and are technically illegal — but companies still find sneaky ways to enact them. In an evergreen clause, contracts are renewed automatically — forever. It is not uncommon for contracts to be automatically renewed once or twice, but for the cycle to continue in perpetuity is another matter altogether.

5. Yellow dog. An oldie, but not a goodie. Fortunately, yellow dog clauses are a thing of the past, having been outlawed in the United States for the past three quarters of a century and then some. It’s easy to see why — yellow dog clauses used to be common provisions of employer-employee contracts, stipulating that the employee had the job only under the condition that they swore not to join a labor union. They were made illegal under the Anti-Injunction Bill of 1932.

If your business is struggling with a contract dispute or breach of contract, don’t try to salvage the situation alone. Contact the attorneys at Berkowitz Klein today to explore your legal options.