Contract Clauses Explained
Plain English explanations of common contract clauses with example wording for UK businesses. Updated 2025.
Restrictive Covenants
Non-Compete Clause
A non-compete clause (also called a covenant not to compete) is a contractual term that restricts a ...
Non-Solicitation Clause
A non-solicitation clause prevents a departing employee, director, or contractor from actively appro...
Restrictive Covenant
A restrictive covenant is a contractual clause that limits what a party can do during or (more commo...
Post-Termination Restrictions
Post-termination restrictions (PTRs) are a suite of restrictive covenants that apply after the emplo...
IP & Data Protection
Confidentiality Clause
A confidentiality clause (also known as a non-disclosure obligation) requires one or both parties to...
Intellectual Property Clause
An intellectual property (IP) clause defines who owns the intellectual property created during the c...
Data Protection Clause
A data protection clause sets out the obligations of the parties in relation to the processing of pe...
Termination
Termination Clause
A termination clause sets out how and when a contract can be brought to an end by either party. It t...
Redundancy Clause
A redundancy clause sets out what happens if an employee's role is made redundant. In the UK, redund...
PILON Clause
A PILON (Payment in Lieu of Notice) clause allows the employer to terminate employment immediately b...
Break Clause
A break clause gives one or both parties the right to terminate a fixed-term contract before it woul...
Employment
Notice Period Clause
A notice period clause specifies the amount of advance warning either party must give before termina...
Garden Leave Clause
A garden leave clause allows an employer to require an employee to stay away from the workplace duri...
Probation Clause
A probation clause sets an initial trial period at the start of employment during which the employer...
Overtime Clause
An overtime clause specifies whether an employee may be required to work beyond their normal contrac...
Holiday Entitlement Clause
A holiday entitlement clause specifies the amount of paid annual leave an employee is entitled to, h...
Sick Pay Clause
A sick pay clause specifies what an employee will be paid when they are unable to work due to illnes...
Pension Clause
A pension clause sets out the employer's pension arrangements and obligations. Since 2012, UK employ...
Parental Leave Clause
A parental leave clause covers the various types of family-related leave available to employees in t...
Flexible Working Clause
A flexible working clause addresses the arrangements for working patterns that differ from the tradi...
Moonlighting Clause
A moonlighting clause (also called an outside activities or secondary employment clause) restricts o...
Operational
Force Majeure Clause
A force majeure clause excuses one or both parties from performing their contractual obligations whe...
Governing Law Clause
A governing law clause (also called a choice of law clause) specifies which country's or jurisdictio...
Dispute Resolution Clause
A dispute resolution clause sets out the process the parties agree to follow when a disagreement ari...
Entire Agreement Clause
An entire agreement clause states that the written contract contains the complete agreement between ...
Assignment Clause
An assignment clause governs whether and how a party can transfer its rights or obligations under a ...
Variation Clause
A variation clause (also called an amendment or modification clause) specifies how the contract can ...
Severability Clause
A severability clause provides that if any provision of the contract is found to be invalid, illegal...
Waiver Clause
A waiver clause (often called a 'no waiver' clause) provides that a party's failure to exercise or d...
Third Party Rights Clause
A third party rights clause addresses whether anyone other than the parties to the contract can enfo...
Acceptance Criteria Clause
An acceptance criteria clause defines the standards, tests, or conditions that deliverables must mee...
Change Order Clause
A change order clause (also called a change control clause) establishes the procedure for requesting...
Commercial
Limitation of Liability Clause
A limitation of liability clause sets a cap on the amount one party can claim from the other if some...
Indemnity Clause
An indemnity clause is a contractual promise by one party (the indemnifier) to compensate the other ...
Warranty Clause
A warranty clause is a contractual statement of fact or promise by one party about the quality, cond...
Retention of Title Clause
A retention of title (ROT) clause — sometimes called a Romalpa clause after the landmark case Alumin...
Automatic Renewal Clause
An automatic renewal clause (also called an evergreen clause) provides that a contract will automati...
Exclusivity Clause
An exclusivity clause grants one party the exclusive right to provide specified goods or services to...
Minimum Term Clause
A minimum term clause commits the parties to the contract for a specified initial period during whic...
Financial
Payment Terms Clause
A payment terms clause specifies when, how, and in what currency payment must be made under a contra...
Late Payment Interest Clause
A late payment interest clause specifies the rate of interest that will be charged on overdue paymen...
Bonus Clause
A bonus clause sets out the terms on which an employee may receive a bonus payment in addition to th...
Commission Structure Clause
A commission structure clause defines how and when a salesperson, agent, or intermediary earns commi...
Expenses Clause
An expenses clause sets out the employer's policy on reimbursing business expenses incurred by emplo...
Clawback Clause
A clawback clause allows an employer or contracting party to reclaim payments already made if certai...
Price Escalation Clause
A price escalation clause allows the supplier to increase the price of goods or services during the ...
Compliance & Data
GDPR Clause
A GDPR clause addresses compliance with the UK General Data Protection Regulation (UK GDPR) — the re...
Anti-Bribery Clause
An anti-bribery clause requires the parties to comply with anti-bribery and anti-corruption laws, pa...
Whistleblowing Clause
A whistleblowing clause encourages employees to report wrongdoing (such as criminal offences, failur...
Social Media Clause
A social media clause sets out the employer's expectations and rules regarding employees' use of soc...
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