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What is a “Full Satisfaction and Forbearance” clause?..

This clause stipulates that the lender will be restricted from exercising default rights from another loan agreement during the outlined period of time.

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What is a “Legal Opinion” clause?..

This clause addresses the parameters regarding parties acquiring legal opinions.

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What is a “Condition Precedent” clause?..

This clause outlines certain conditions that must be fulfilled before the agreement can come into effect. It may also outline the consequences of a party failing to meet anyone of those conditions, up to and including termination of the agreement. This can sometimes act as an “escape clause” for a party to terminate their side of the agreement if a stated condition is not met or to unwind the transaction.

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What is a “Condition Subsequent” clause?..

This clause outlines certain conditions that must be fulfilled after the parties have formally entered into the agreement. It may also outline the consequences of a party failing to meet anyone of those conditions, up to and including termination of the agreement. This can sometimes act as an “escape clause” for a party to terminate their side of the agreement if a stated condition is not met or to unwind the transaction.

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What is a “Minutes of Settlement” clause?..

This clause puts forth a “formal record” of what is to take place in the event parties settle issues before a court. Often within the framework of a settlement clause, a provision on confidentiality is included which states that any form of settlement is not to be discussed with third-parties to the agreement.

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What is a “Support Anti-Piracy” clause?..

This clause is an acknowledgement by both parties that they support measures to protect trademark, copyright and other forms of intellectual property rights from being infringed upon or misappropriated. This clause acknowledges that it is unlawful for parties to distribute or replicate unauthorized content freely.

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What is a “Site Provided “as-is”” clause?..

This clause is included as a disclaimer of a company’s liability and is generally included in terms of use or end user licensing agreement. The clause usually states that the site is provided without some or any warranties and at the user’s own risk.

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What is a “Representations, Warranties and Covenants – Not Target Children” clause?..

This clause is a representation by a party that they will not target children. This could be in relation to advertising or use of a product or service.

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What is a “Content is Not Defamatory, Discriminatory, or Illegal” clause?..

This clause states that content being posted or uploaded to a product or service is not defamatory, discriminatory, or illegal. This clause is often found as a user obligation in terms of use.

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What is a “Defects or Critical Bug” clause?..

This clause outlines the procedure to be followed where a defect or critical bug in a product or service is discovered. It may include information such as party liability, the definition of a critical bug, and notifications.

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What is a “Guarantee” clause?..

A guarantee is a written promise by the guarantor that specific conditions or obligations will be fulfilled, failing which the guarantor will be obliged to take certain steps to make things right. In some commercial agreements, a product may be ‘guaranteed’ to function properly for one year, or the customer will be entitled to a refund or a replacement product. In financial and commercial documents, the guarantee refers to a promise by the guarantor that they will pay the debt or fulfill the obligations of one of the parties if that party fails to pay or perform their obligations. This type of guarantee clause is found in loan agreements, security agreements, commercial leases etc.

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What is a “Conversion of Loan Into Equity” clause?..

Debt can be converted into shares (equity) if the agreement has a conversion clause. This clause will establish the number and type of shares into which the debt is to be converted. The conversion can be triggered in a variety of ways: at the discretion of the investor at any time; at the discretion of the investor upon the occurrence of specific events; automatically upon the occurrence of certain events, eg. a specific date or a change of control event, etc.

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What is a “Maturity” clause?..

In general, the maturity date refers to the final due date on which all outstanding amounts of principal and interest under a loan or other investment are payable in full. This clause will set out the maturity date (or dates if the agreement includes a series of advances or investments).

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What is a “Definition of Principal” clause?..

This clause will define ‘principal’ under the agreement. In financing, investment and loan documents (eg. loans, general security agreements, promissory notes, term sheets, mortgages etc.) the word ‘principal’ will refer to the amount borrowed or invested. Interest is payable on the outstanding principal amount.

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What is a “Able to Work as Team Member” clause?..

This clause will require the party (usually an employee or contractor) to be able to work as a team member as part of the requirements for the position, and will require the party to agree that they are able and willing to work as a team member. The clause may also include some aspects of what working as a team member means, eg. ability to communicate effectively.

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What is a “Performance of Duties” clause?..

This clause will require the party to perform the duties set out in the agreement, and can outline the standards to be applied to the performance of the duties under the agreement. For example, the employee/contractor/service provider may be required to perform their duties in accordance with ‘industry standards’; or ‘using best efforts’; or with ‘the care, diligence, and skill customary for a professional (eg. architect)’ etc.

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What is a “Non-Disparagement” clause?..

This clause is included to prevent any defamation by one or either of the parties. It states that one or either of the parties will not speak negatively about the other party or put them in disrepute.

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What is a “Non-Interference” clause?..

This clause is a protectionist clause where either or one of the parties agrees they will not interfere with the other party’s business, customers or employees. This clause will often have a term period.

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What is a “Non-Circumvention” clause?..

This clause blocks the recipient of the information from using the information against the party who provided it.

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What is a “Definition of Competitor” clause?..

This clause describes competitors of the company.

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What is a “Representations, Warranties and Covenants – Exclusivity Period” clause?..

This clause is included where the customer will have an exclusive license for a certain time period.

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What is a “Non-competition / Non-solicitation / Non-circumvention” clause?..

This clause is called a restrictive covenant, because it restricts a party from doing a number of things with respect to the interests of the other party. The non-competition portion of the clause prohibits the party from competing against the business of the other party for a specific period of time. The non-solicitation obligation prohibits the party from soliciting (enticing away) employees, business opportunities etc. from the other party or a specific period of time, and the non-circumvention obligation prohibits the party from circumventing, or getting around, its obligations to the other party. All of these restrictions will apply during the term of the agreement, and for a fixed period after the termination of the agreement.

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What is a “Customer Responsibilities/Obligations – Software – Access to Documentation OR Networks OR Access to Hardware OR Software” clause?..

This clause requires the client in a software services agreement to provide the contractor (eg. software developer) with prompt access to the software, hardware, and documentation they require to perform their obligations under the agreement. The clause can provide that delays caused by failure of the customer to provide this access will be the responsibility of the customer.

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What is a “Customer Responsibilities/Obligations – Prompt Payment” clause?..

This clause ensures that the company or service provider receives payment from the customer without any delays. The company or service provider will often include a clause providing for an interest rate on late payments.

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What is a “Customer Responsibilities/Obligations – Prompt Response To Requests” clause?..

This clause places an obligation on the customer to respond to a request by the company or service provider for information that they find necessary to perform their work. This clause is in favor of the company or service provider and can act as a limit on their liability.

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What is a “Customer Responsibilities/Obligations – Appoint a Client-Side Representative” clause?..

In a services contract where a product (eg. software) is being developed, this clause will require that the client appoint a representative who will handle all communications with respect to the project. This avoids miscommunication and ensures for proper authorization of any changes to the scope of the project.

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What is a “Not to Use Service for Benchmarking or Competitive Purposes” clause?..

This clause prohibits the customer from engaging the services of the other party for the purposes of gaining information that would allow the customer to compete more effectively with the service provider.

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What is a “Representations, Warranties and Covenants – Not to Use Services for Illegal Purpose” clause?..

This clause is a representation/warranty which states that the user of a website, product, or service warrants that they will not use the product or service for illegal purposes. Illegal purposes can include drug or human trafficking, fraudulent activity or any other actions that are criminal activity.

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What is a “Not to Damage or Interfere” clause?..

This clause restricts a customer or user of a website product or service to not damage any technical parts or interfere with other user’s use of the product or service. This clause is generally included in a Terms of Use as one of the customer’s obligations.

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What is a “Agreement to Employ” clause?..

This clause confirms the employer is agreeing to employ the employee in consideration for the terms laid out in the employment agreement.

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What is a “Ability to Perform Role” clause?..

This clause is a representation that the employee or contractor has the ability, including the requisite skills and training, to perform the role/duties described in the agreement and will perform them.

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What is a “Representations, Warranties and Covenants – Employee Benefit or Pension Plan” clause?..

This representation is often seen in a consulting/contractor agreement as the company will want to make sure it is clear to the contractor that since he/she is not an employee they may not be entitled to company benefits or their pension plan.

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What is a “Representations, Warranties and Covenants – Not an Employee” clause?..

This representation is often seen in a consulting/contractor agreement as the company will want to make sure it is clear to the contractor they are not an employee of the company. This is important as being an employee and not a contractor carriers with it certain statutory benefits.

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What is a “Representations, Warranties and Covenants – Perform Services in Accordance with Agreement” clause?..

This clause is a representation/warranty that the party will perform services in accordance with the agreement. While parties are generally responsible to meet their obligations under an agreement, this type of clause becomes important if the agreement also contains a clause that provides for an indemnity for a breach of warranties, or provides for other special remedies for a breach of warranty.

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What is a “Business Continuity Plan” clause?..

This clause requires a party to the agreement to have an acceptable business continuity plan in place. A business continuity plan is a plan that provides a strategy to ensure that, in the event of a disaster, the property and personnel of the business will be protected and will be able to continue to function. This includes plans for the backup of data and safe storage of data, an alternative place of business, security protocols, backup generators to protect equipment, insurance etc.

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What is a “Sufficient Documentation” clause?..

This clause requires one party to provide the other party with sufficient documentation (relevant to the particular purpose of the agreement) to enable the other party to carry out its obligations under the agreement. For example, one party may be required to provide the other party with sufficient documentation to enable the other party to obtain permits, or government approvals, or various types of certification etc., or to enable the other party to complete its own due diligence.

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What is a “Right to Remove Access to Services” clause?..

This clause deals with the service provider’s right to remove a client’s access to services, usually based on the service provider’s determination that the client’s use of the services has breached the terms of the agreement. This type of clause is especially common in a website Terms of Use.

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What is a “Monitoring Client Access to Services” clause?..

This clause deals with the monitoring of client access to the services provided under the agreement. The clause will usually give the service provider the right to monitor the client’s access to the services to determine whether or not the access is in compliance with the terms of the agreement, and to take action if the use is in breach of the agreement. The agreement will make the client responsible for whoever accesses the services on the client’s behalf. Clients will want to include language that requires the service provider to provide a report of client access to the services so that it can also monitor how its account is being used by its employees/agents.

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What is a “Online Support” clause?..

This clause stipulates that online support may be provided to the user during certain hours or if they require immediate assistance.

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What is a “Support Services” clause?..

This clause will outline the types of support services available under the agreement, the time during which they will be available, and the cost of those services.

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What is a “Training by Supplier Only” clause?..

This clause will describe what training is to be provided by the supplier. This clause is often included in a distribution agreement as the supplier will want to train the distributor on the product and how best to sell the product. This clause can outline what the training entails, when it will occur and/or who will be conducting it. This may outline what the training consists of, how many hours are required, and/or when it has to be completed.

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What is a “Training by Company” clause?..

This clause will outline what training the company will provide. This clause may describe how many hours of training are required, who will be conducting the training and when it has to be completed. It will also specify who will receive the training.

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What is a “Training” clause?..

This clause describes what training may be required in order to perform the duties outlined in an agreement. It may specify who will provide and pay for the training.

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What is a “Time Needed Before Commencement of Project” clause?..

The clause sets out the time lines with respect to the commencement of a project under the agreement. Once the parties have reached an agreement on a project, one party may require time to obtain necessary permits, personnel, subcontractors, materials, financing etc. before commencing the project. This clause will make it possible for the parties to establish a realistic time line for meeting the obligations under the agreement.

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What is a “Definition of Schedule” clause?..

This clause defines the schedules that are attached to an agreement. A schedule is a document that is related, or ancillary to the agreement and often includes specific tasks, services, timelines, and additional related agreements.

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