Contract Provisions Glossary
Not every contract clause is what it seems. Below are plain-English explanations of eight provisions you'll encounter in nearly every business contract — along with red flags and Oklahoma-specific notes.
What it is: One party agrees to cover the other party's losses — including legal fees, judgments, and settlement costs — if something goes wrong.
What it means for you: If you sign a contract with a broad indemnification clause, you could be on the hook for the other party's mistakes, not just your own. A mutual indemnification clause — where both sides agree to cover their own negligence — is standard and fair. A one-sided clause is not.
Red Flags
- One-sided indemnification (only you indemnify them, not mutual)
- Language covering the other party's own negligence
- No cap on indemnification liability
- "Broad form" indemnity that covers losses regardless of fault
What it is: A clause that excuses performance when extraordinary events occur — natural disasters, pandemics, government action, war, or other events beyond the parties' control.
What it means for you: If a force majeure event happens, the affected party doesn't breach the contract by failing to perform. This became critically important during COVID-19, when many businesses relied on these clauses to excuse non-performance.
Red Flags
- Vague language that doesn't list specific triggering events
- No notice requirement
- No termination right if the event lasts beyond a reasonable period
- Only one party benefits from the clause
What it is: Restricts what you can do after the business relationship ends. A non-compete prevents you from working for a competitor. A non-solicitation prevents you from poaching clients or employees.
What it means for you: These clauses can significantly limit your options after leaving a job or selling a business. However, enforceability varies dramatically by state.
Oklahoma Note
Non-competes are largely unenforceable in Oklahoma under 15 O.S. § 219A. The exceptions are narrow — primarily limited to the sale of a business or dissolution of a partnership. If someone puts a non-compete in your employment contract in Oklahoma, it is likely unenforceable. Non-solicitation clauses occupy a grayer area and may still be enforceable depending on their scope.
Red Flags
- Overly broad geographic scope
- Unreasonable duration (more than 1–2 years)
- No consideration given in exchange for the restriction
What it is: You agree to resolve disputes through private arbitration instead of court. An arbitrator — usually a retired judge or attorney — hears the case and makes a binding decision.
What it means for you: You give up your right to a jury trial and, in most cases, your right to appeal. Arbitration can be faster than litigation, but it can also be more expensive and less transparent. The process is private, and the arbitrator's decision is final.
Red Flags
- Mandatory (not optional) arbitration
- The other party selects the arbitrator or the arbitration forum
- Waiver of class or collective action rights
- Arbitration costs are shifted entirely to you
- Arbitration must take place in a distant location
What it is: A pre-agreed amount of damages if one party breaches the contract. Instead of proving actual damages in court, the contract specifies: "If you breach, you owe $X."
What it means for you: Liquidated damages provisions are enforceable when the agreed-upon amount is a reasonable estimate of anticipated harm and actual damages would be difficult to calculate. However, courts can strike them down as unenforceable penalties if the amount is disproportionate to any realistic harm.
Red Flags
- Amount is grossly disproportionate to any realistic harm
- Only one party is subject to liquidated damages (not mutual)
- Used as a punitive mechanism rather than a genuine estimate of loss
What it is: Determines which state's law governs the contract and where disputes must be litigated or arbitrated.
What it means for you: If you are an Oklahoma business and the contract says "governed by New York law, disputes in New York courts," you would need to hire a New York lawyer and travel to New York to litigate any dispute. This can be prohibitively expensive and effectively prevents you from enforcing your rights.
Red Flags
- Any choice of law or forum that is not your home state — unless you have a strong reason to agree
- Exclusive (not non-exclusive) jurisdiction clauses that lock you into a single venue
What it is: If one provision of the contract is found invalid or unenforceable, the rest of the contract survives.
What it means for you: This is standard boilerplate and is generally protective for both parties. Without it, an invalid provision could potentially void the entire agreement. It's rare for a severability clause to be a problem — but it's worth noting that it exists.
This provision is typically low-risk and standard. Focus your review time on the other provisions listed here.
What it is: The written contract is the entire agreement between the parties — no prior emails, conversations, or handshake deals count.
What it means for you: If the other party promised you something verbally — a discount, a deadline extension, a specific service — but it isn't in the written contract, you likely cannot enforce it. The integration clause essentially says: "If it's not in this document, it doesn't exist."
Red Flags
- You relied on verbal promises that are not in the written contract
- Important terms were discussed by email but never incorporated into the final agreement
Questions About Your Legal Matter?
These resources provide general information. For guidance specific to your situation, contact Addison Law Firm.
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