Clauses That Protect Your Organization in a Mutual Agreement Contract

When public organisations enter into mutual-agreement contracts, it is crucial to include robust clauses that proactively protect their interests. For an audience of public organisations using or advising on procurement and partnership agreements, here are key clauses to consider — framed in a Canadian context — with practical take-aways for drafting with clarity and enforceability.

1. Governing Law and Jurisdiction Clause

A clearly-worded governing law and jurisdiction clause ensures that, should a dispute arise, the contract specifies which legal system and courts apply. Canadian contract law recognises such autonomy so long as it is bona fide and not contrary to public policy. (Wikipédia)
Why it protects you: It avoids uncertainty and forum shopping. For example, if a public body in Ontario enters a partnership with an out-of-province supplier, specifying Ontario law and Ontario courts helps ensure clarity and enforceability.
Drafting tip: Use language such as: “This Agreement shall be governed by and construed in accordance with the laws of the Province of [X] and the laws of Canada applicable therein. The Parties attorn to the exclusive jurisdiction of the courts of [Province] for any dispute.” This mirrors practice recognised in Canada. (Wikipédia)
Public-organisation note: If procuring across jurisdictions, ensure the chosen province has familiarity and capacity for resolving public-sector contract matters.

2. Entire Agreement / Amendments Clause

Such clauses help ensure that parties cannot rely on prior representations or informal communications to alter the contract terms. According to a federal government licensing-agreement resource, standard clauses include an “Entire agreement and amendments” provision. (Gouvernement du Canada)
Why it protects you: It reduces risk of hidden commitments or unwanted liabilities slipping into the contract via side letters, emails or informal understandings.
Drafting tip: Include: “This Agreement, and any schedules or appendices, constitutes the entire agreement between the Parties relating to its subject matter. No amendment, modification or waiver shall be effective unless made in writing and signed by both Parties.”
Public-organisation note: Especially important when public bodies engage with multiple vendors or stakeholders so that internal and external expectations remain aligned and documented.

3. Indemnity and Liability Clause

Indemnity clauses allocate risk between parties, often requiring one party to “save harmless” the other from third-party claims, losses or costs. A Canadian medico-legal commentary highlights the difference between unilateral and mutual indemnity clauses and stresses careful definition of scope. (CMPA)
Why it protects you: For a public organisation, indemnities help shield the entity from liability flowing from a partner’s negligence, breaches, or third-party claims arising out of performance.
Drafting tip: Define clearly: (a) which party is indemnifying whom; (b) the types of losses covered (e.g., third-party claims, damages, legal costs); (c) any exceptions (such as claims caused by the indemnitee’s own gross negligence or wilful misconduct). Also include notification and co-operation obligations in the event of a claim.
Public-organisation note: Ensure the indemnity is capped appropriately and consistent with your risk tolerance and the public accountabilities you face (e.g., transparency, cost-control, oversight).

4. Termination and Default Clause

Effective contracts allow public bodies to terminate for default (if the other party breaches or becomes insolvent) and often for convenience (to preserve flexibility). For example, the federal government’s short form contract includes default, termination for convenience, suspension and set-off provisions. (Ministère de la Justice)
Why it protects you: This ensures you have an “exit ramp” if performance fails or circumstances change (e.g., funding cuts, policy shifts) — key for public organisations operating in dynamic regulatory or fiscal environments.
Drafting tip: Specify default triggers (e.g., non-performance, insolvency, regulatory breach), notice periods, cure rights, termination rights, and for-convenience mechanisms (including any reimbursement of costs and limitation of liability).
Public-organisation note: Negotiate early-termination rights and ensure that contractual obligations incurred prior to termination (such as auditing, confidentiality, or asset disposition) persist as appropriate.

5. Confidentiality, Records, Audit and Compliance Clause

Public organisations are subject to transparency, auditing and regulatory obligations. Setting out clear records-keeping, audit rights, confidentiality obligations, compliance with applicable laws and audit access is essential — as seen, for example, in federal contribution agreements. (Affaires mondiales Canada)
Why it protects you: It safeguards the public organisation’s ability to monitor performance, meet accountability obligations, respond to freedom of information requests, and maintain public trust.
Drafting tip: Include obligations on the other party to (a) maintain books and records for a defined retention period; (b) allow the public body (and auditors) access for inspection; (c) comply with applicable laws and regulatory requirements; (d) treat confidential information appropriately, and (e) include audit and monitoring rights, including after termination.
Public-organisation note: Consider whether subcontractors or sub-agreements also need to carry corresponding obligations, to maintain the same level of contractual protection throughout the supply chain.

Conclusion

For public organisations entering into mutual agreements, including well-drafted clauses for governing law, entire-agreement amendments, indemnity, termination/default, and audit/compliance ensures the organisation is protected, accountable and resilient. Each clause should be tailored to the specific context — including the regulatory environment, funding structure and risk profile of the organisation. By embedding these protections, your contracts support operational reliability, legal clarity and public accountability.

Sources referenced

• Government of Canada, Standard Clauses – licence agreement checklist, Canada.ca. (Gouvernement du Canada)
  
• Government of Canada, Model request for proposal and resulting contract clauses, TPSGC-PWGSC. (SPAC)
  
• Law Society of Ontario, The Contract: Potential Issues and Sample Clauses, LSO. (Société du Barreau de l’Ontario)
  
• CMPA, Medical-Legal Issues to Consider with Individual Contracts. (CMPA)
  
• Government of Canada, Professional Services – Short Form Contract. (Ministère de la Justice)
  
• Government of Canada, Contribution Agreement – General Terms and Conditions. (Affaires mondiales Canada)
  
• Government of Canada, Office of the Procurement Ombud – Contract Clauses in Federal Procurement Documents. (opo-boa.gc.ca)