A contract is an essential part of every business. It involves the challenge of putting words on paper that accurately describe the agreements between the parties in a way so that each parties viewpoint is easily understood should a dispute arise in the future. A well-written contract provision is one that clearly indicates what is agreed upon while leaving no room to argue that something else was intended. Provided below are certain basic tips to keep in mind while drafting a contract:
Ground Work
Begin with a clear and thorough understanding of the precise nature of the relationship the parties intend. If necessary meet with all parties to write the contract. Although templates or samples are available for reference it is good to keep in mind that that every contract is unique and that there is not just one format that will fit the needs of every situation. Also, remember that specific industries will require special terminology to be included in the contract.. Try to understand the whole design before you begin to draft the contract.
Simplicity
Contract provisions should be expressed as simply as possible.. Simple provisions are easy to read,understand, negotiate and rewrite. Simple provisions are likely to be precise and are less overly complicated contract provisions can be easily simplified with proper drafting and editing techniques. Try using sentences with less than 25 words, preferring short words to long words, using plain English susceptible to competing interpretations. Try to balance precision with simplicity. A majority of and avoiding jargon, minimizing prepositions, avoiding noun pile ups, and cutting down unnecessary preambles.
Terminology
Generally, all contractual terms are construed according to their ordinary meanings unless the contract itself specifies otherwise. Therefore, remember to include a terminology section including all important terms in the agreement used in the contract. This is especially true for terms that are specific to a given industry. Normally, a term should only be given a special definition in a contract if it is used more than once. A well-drafted contract should always include a terminology section.
Time Periods
Most all contracts need to define a period of time such as starting and ending dates, notice periods, cooling-off periods, termination periods, and so on. Remember to give special attention to this section as the consequences can be nasty. A well defined time period should have a start date and often a start time, as well as an end date and often an end time. The times and dates should be determinable without any doubt, vagueness or ambiguity.
Consideration
The cornerstone of a contract is mutuality of consideration, as a contract without consideration is generally not valid. When drafting the consideration clauses remember to include a complete description of the consideration specifically tailored to the subject matter of the contract. For example: In a real property transfer use the legal description as it appears on the deed, for money specify the exact dollar amount etc.. The consideration being given by each party should be clearly described, and it should include terms such as price, quantity, quality and time of performance. Also, remember to detail any conditions the parties wish to impose on their performances such as late payment penalties, “time-is-of- the-essence” clauses and the like.
Clarity
The ultimate goal of when drafting a contract is clarity. A contract should clearly communicate the subject matter to its intended audience. If you write with precision, consistency and simplicity your intention will be clear. If a contract cannot be understood by a reasonably intelligent person after spending a reasonable amount of time with it, we can assume that the drafter has failed in his/her task. A few tips for keeping a contract clear are using familiar concrete words, writing numbers as both words and numerals to avoid errors, cutting out non essential, avoiding the use of “and/or”, avoiding repetition unless it improves clarity, etc. It also helps to keep in mind that writing a contract is not creative writing; you need to be clear, direct, and precise, not provocative, reflective or entertaining.
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