Commercial Contracts: The 8 Clauses That Really Protect Your Business

In the life of a business, most commercial disputes stem from a contract that is missing, incomplete or copied from an unsuitable template. Conversely, a well-drafted contract often allows a dispute to be settled with a single letter rather than two years of litigation. Whether you are a trader in Inezgane, a manufacturer in Ait Melloul or a service provider in Agadir, here are the eight clauses to get right first.

1. Precise identification of the parties

It sounds obvious, yet it is a frequent source of trouble. The contract should state the company’s exact name, legal form, registered office, trade register number and common company identifier (ICE), as well as the identity of the signatory and confirmation of their authority. A contract signed by someone without authority can be challenged; a poorly identified debtor is hard to pursue.

2. Subject matter and each party’s obligations

Describe precisely what is sold or supplied: quantities, specifications, standards, place and date of delivery, acceptance conditions. The more precise the description, the easier it is to prove that an obligation was not met. For services, attach specifications or a technical schedule.

3. Price and payment terms

The contract should set the price, any price-review mechanism, the payment schedule and method. Between businesses, the law regulates payment terms: if nothing is agreed, a statutory period applies, and the parties cannot agree on a period beyond the legal ceiling. Late payment exposes the debtor to penalties. Also provide for security: deposit, guarantee, bills of exchange. If an invoice still goes unpaid, see how to recover a debt in Morocco.

4. Liability, warranties and force majeure

Who is answerable for a defect, a delay or damage to a third party? The contract can organise warranties, cap certain liabilities and require insurance. It is also useful to define what the parties regard as force majeure and its consequences (suspension, termination), rather than leaving everything to the judge’s discretion.

5. The penalty clause

A penalty clause sets in advance the compensation due for non-performance or delay, for example a percentage per day of late delivery. It acts as a deterrent and avoids a long argument over the amount of loss. Be careful: Moroccan judges can reduce a manifestly excessive penalty or increase a derisory one. It is therefore better to set a reasonable, justifiable amount.

6. Confidentiality and non-competition

When you share sensitive information (prices, customers, know-how, files), a confidentiality clause is essential. A non-compete or non-solicitation clause can also protect your customer base, provided it is limited in time, territory and scope; an overly broad clause risks being set aside.

7. Term, renewal and termination

The contract should specify its duration, the renewal conditions and, above all, when and how it can be terminated: notice period, prior formal notice, automatic termination for serious breach, and what happens to orders in progress. A well-drafted termination clause lets you leave a relationship that has become unfavourable without being held liable for wrongful termination.

8. Dispute resolution

Set out the governing law, the language of the contract and the competent court, for example the Agadir Commercial Court. You can also opt for conventional mediation or arbitration, now governed by dedicated legislation: these alternatives are often faster and more confidential, especially with foreign partners. A badly drafted arbitration clause can itself cause litigation, however: it must clearly name the institution or the method for appointing arbitrators.

A few formal tips

• Sign and initial every page, including schedules, and keep an original copy.
• Avoid general terms that were never provided to the other party: they are hard to enforce against it.
• Electronic signatures are recognised in Morocco under certain conditions; for important contracts, make sure you use a compliant method.
• Have every significant contract reviewed before signing: it is the most cost-effective legal investment you can make.

A lawyer to draft or review your contracts

The office of Maître Said Laachili drafts, reviews and negotiates contracts for businesses in Agadir and Inezgane: sales, distribution, services, partnerships and subcontracting. It also acts in disputes before the commercial courts and in arbitration and mediation, as part of its commercial law and business law practice.

To go further, read the guide to setting up an SARL in Agadir and our article on commercial leases. A contract to draft or check? Contact the office.