Conduct of business clause: Copy, customize, and use instantly
Introduction
A conduct of business clause establishes the standards and responsibilities for how a party must manage their operations, particularly during the term of an agreement. It ensures compliance with legal, ethical, and operational standards, protecting the interests of the parties involved and maintaining trust in business practices.
Below are templates for conduct of business clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
General compliance with laws
This clause requires adherence to all applicable laws and regulations.
The party agrees to conduct its business in compliance with all applicable laws, regulations, and industry standards. This includes, but is not limited to, laws governing labor, environmental protection, and corporate governance.
Ethical business practices
This clause ensures ethical standards in business operations.
The party shall conduct its business in an ethical and professional manner, avoiding any actions that could harm its reputation or that of the other party. This includes compliance with anti-corruption and anti-bribery laws.
Maintenance of financial records
This clause mandates proper financial record-keeping.
The party agrees to maintain accurate and complete financial records in accordance with generally accepted accounting principles (GAAP) and to make such records available for inspection upon reasonable request.
Continuity of operations
This clause requires maintaining consistent business operations.
The party shall take all reasonable steps to ensure the continuity of its business operations, including maintaining adequate staffing, resources, and contingency plans to address potential disruptions.
No material adverse change
This clause prohibits actions that could negatively impact business stability.
The party shall not engage in any activity or transaction that could result in a material adverse change to its financial condition, operations, or business prospects without prior written consent from the other party.
Reporting obligations
This clause sets requirements for reporting significant business developments.
The party agrees to promptly notify the other party of any significant developments that could affect its ability to fulfill its obligations under this Agreement, including changes in management, ownership, or financial stability.
Use of best efforts
This clause ensures diligent efforts in managing business obligations.
The party shall use its best efforts to manage and operate its business in a manner that ensures the successful performance of its obligations under this Agreement.
Restrictions on mergers and acquisitions
This clause limits changes in business ownership or structure.
The party shall not enter into any merger, acquisition, or similar transaction that would result in a change of control without providing prior written notice and obtaining the consent of the other party.
Preservation of assets
This clause mandates maintaining the business’s assets.
The party agrees to preserve, protect, and maintain its assets, including intellectual property, equipment, and other resources, in good condition and free from liens or encumbrances.
Prohibition on unlawful activities
This clause prohibits illegal actions within business operations.
The party shall not engage in any unlawful activities, including fraud, tax evasion, or other prohibited practices, that could negatively impact the business or its stakeholders.
Environmental compliance in business operations
This clause mandates adherence to environmental laws and sustainable practices.
The party agrees to conduct its business in compliance with all applicable environmental laws and regulations, adopting sustainable practices to minimize environmental impact wherever feasible.
Prohibition on conflict of interest
This clause prevents activities that could create conflicts of interest.
The party shall avoid any activities or transactions that create or appear to create a conflict of interest with its obligations under this Agreement. Any potential conflicts must be disclosed to the other party immediately.
Maintenance of insurance coverage
This clause requires the party to maintain adequate insurance.
The party agrees to maintain appropriate insurance coverage, including liability, property, and business interruption insurance, to safeguard its operations and comply with applicable legal requirements.
Safeguarding confidential information
This clause ensures the protection of sensitive business information.
The party shall implement and maintain safeguards to protect confidential information, ensuring that such information is not disclosed or used improperly during the course of business operations.
Adherence to industry standards
This clause enforces compliance with recognized industry standards.
The party agrees to operate its business in accordance with recognized industry standards, ensuring the quality, safety, and reliability of its products or services.
Non-discrimination in business practices
This clause mandates equitable treatment in operations.
The party shall conduct its business without discrimination based on race, gender, age, disability, or any other legally protected characteristic, in compliance with applicable anti-discrimination laws.
Regular audits and compliance checks
This clause requires periodic audits of business operations.
The party agrees to conduct regular audits of its business operations and compliance programs to ensure adherence to the terms of this Agreement and applicable laws.
Fair competition practices
This clause prohibits anti-competitive behavior.
The party shall refrain from engaging in anti-competitive practices, including price-fixing, market allocation, or other activities that violate competition laws and regulations.
Maintenance of employee welfare
This clause ensures the party upholds employee rights and welfare.
The party agrees to provide a safe and healthy workplace, comply with labor laws, and support the welfare of its employees through fair compensation and benefits.
No unauthorized subcontracting
This clause restricts the delegation of business responsibilities.
The party shall not subcontract or delegate any of its obligations under this Agreement to a third party without prior written approval from the other party.
Compliance with tax obligations
This clause requires timely and accurate tax payments.
The party agrees to fulfill all tax obligations, including filing returns and remitting payments, in compliance with applicable tax laws and regulations.
Anti-money laundering compliance
This clause mandates adherence to anti-money laundering laws.
The party shall implement measures to prevent money laundering and comply with all applicable anti-money laundering regulations, including conducting due diligence on transactions.
Maintenance of supply chain integrity
This clause ensures ethical practices within the supply chain.
The party agrees to monitor its supply chain to ensure compliance with ethical sourcing practices, labor laws, and human rights standards.
Prohibition on illegal profits
This clause restricts earning profits through illegal means.
The party shall not earn profits or revenues through illegal activities, including but not limited to fraud, bribery, or embezzlement.
Technology and data security compliance
This clause mandates adherence to data security standards.
The party agrees to implement and maintain robust cybersecurity measures to protect sensitive data and comply with applicable data protection laws and industry standards.
Good faith in negotiations
This clause requires honest dealings in business activities.
The party shall act in good faith in all negotiations, communications, and transactions related to its business operations under this Agreement.
Timely payment of obligations
This clause mandates prompt settlement of financial obligations.
The party agrees to pay all financial obligations, including debts, invoices, and employee wages, in a timely manner to ensure smooth business operations.
No interference with third-party contracts
This clause prevents disruption of existing contractual relationships.
The party shall not interfere with or disrupt the contractual relationships of third parties involved in its business operations or those of the other party.
Business transparency requirements
This clause ensures openness in business dealings.
The party agrees to maintain transparency in its business operations, including accurate reporting of financial and operational information to stakeholders.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.