Expert Contract Review by Contract Lawyers | Global Legal Law Firm

Termination Provisions

These are among the most contested contract terms in ISO agreements, and you’ll want a contract manager to make sure your terms are fair. Sales agents will typically collect residual payments from ISOs, whether it’s from equipment fees, typical business transactions, or other sources. A termination provision in an employment contract typically states how long these residual payments will go on for and whether renewal is possible.

It will also typically have a clause that lists how and why these residuals can be terminated. If this occurs early, there may be extra fees involved. Most contracts will allow sales agents to continue to receive their owed residuals following termination for any reason. Clear termination provisions are crucial in preventing contractual disputes. Our review process can make sure these business contract provisions are fair for both parties. If one party feels that it isn’t, then revisions can be made following negotiations.

Residuals and Termination

The merchant services agreement will typically describe how much of a residual the sales agent will collect from the ISO in equipment fees, business sales, and other sources.

Fees and taxes are often specified by the laws of the state or jurisdiction where the business is located, or they may be capped at a certain amount, so astute business owners will look to their attorneys and accountants for guidance. Residuals also require termination clauses as well as percentages, and because of the tricky nature of percentage contracts and residuals on fees, we strongly encourage everyone to have their contracts reviewed before signing to avoid potential contract disputes. Legal document review is crucial in identifying and resolving such disputes, ensuring that the client’s interests are protected.

Revenue and Ownership

The merchant account agreement should include a clause describing what revenue is shared with the ISO. Ideally, the ISO should share in all revenue.

This prevents them from raising prices on a merchant with whom they don’t share revenue. A contract review will catch this type of maneuver, which is often hidden in the fine print and benefits the ISO at the expense of the merchant. Who owns the equipment, such as a credit card scanner, after the contract is up, needs to be specified as well. These are the things your attorney will know to ask when reviewing the contract and other legal documents. An experienced contract attorney can ensure all clauses are fair and understood.

Jurisdiction

Merchant services agreements always spell out where the contract will be litigated if it is contested, making it crucial to review this legal document thoroughly. Legal professionals play a vital role in providing expert advice on such clauses.

This can be important for several reasons. Travel and favorability of the merchant’s home state should be considered, as well as the state’s position on business law and tax laws.

Your attorney should also look for – or will include or exclude when drafting – a clause regarding arbitration. Many companies such as Visa now require mandatory binding arbitration instead of a jury trial in legal disputes. Such a clause may be included in boilerplate contracts, and a good attorney should ask if such a clause can be waived. ‌These aren’t the types of considerations the average business is likely to watch for in a contract, but our lawyers’ expertise keeps us on the watch.

Revenue Clauses

Regardless of your type of business contracts, an ISO agreement will include clauses about what revenue they share in or collect residuals from. For your financial interests, you’ll want to check the fine print to ensure that the ISO shares in all revenue, whether it’s a flat fee or percentage. Otherwise, an ISO can raise their prices on a merchant they don’t share revenue with. Even a basic contract review will ensure that payment terms are fair and understood.