Philippine commercial contracts: five clauses that need explicit drafting
Jurisdiction, payment, quality claims, termination and force majeure — ambiguity here becomes cost later.
1. Governing law and dispute resolution
State which law applies and which arbitral institution or court hears disputes. “Amicable negotiation” alone leaves no route when a dispute actually arises.
2. Payment and security
Define currency, milestones, late interest and security. For first-time counterparties, prefer letters of credit, partial prepayment or escrow over full open account.
3. Quality claims and inspection
Specify standards, inspecting party, claim period and handling process. Without a claim period, liability can be pursued indefinitely in practice.
4. Termination and exit
Cover termination for breach and for convenience, treatment of inventory and goods in transit, and return of trademarks and channel materials.
5. Force majeure and change of circumstances
Typhoons, earthquakes and policy shifts are common; define notice obligations, evidence and consequences.
Note
General guidance only, not legal advice. Final contracts should be reviewed by counsel qualified in Philippine law.
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