4 More Easy Steps
In thee interest of enabling you to write and draft the best contracts you can, we have searched and found four more easy implementable steps in order to maximize your talent when it comes to drafting a contract.
1. Define Important Terms and Parties
It’s a good idea to define all important terms as you use them. For example, if your contract specifies that “profits” are to be split between the parties, then it’s also a good idea to specify whether you are referring to gross profits or net profits. Similarly, the contract should clearly specify what sales or proceeds will be deemed “profits” in the first place. Likewise, if your contract involves the buying and selling of property, define the property clearly enough that it could be identified by a third party otherwise unfamiliar with the deal. The same is true when identifying the parties to the contract.
2. Avoid Inadvertently Using Words With Legal Significance
Some words have greater significance to a lawyer than they might to a layperson. While this may be obvious, it’s an essential point to remember when drafting a contract. After all, the difference in legal meaning and standard usage of a word can lead to confusion in a contract. For example, labeling an individual as an “agent” can carry specific legal significance in terms of the individual’s legal authority to act on a party’s behalf. For this reason, you should be very careful any time you use a word that you recognize as possessing a specific legal meaning. If you don’t intend to apply that specific legal meaning, choose another word.
3. Write Numbers in Both Words and Numerals
When you’re reviewing your contract, it’s incredibly easy to make small errors like misplacing a comma, dropping a zero, or omitting a decimal point. But when those decimal points, zeroes, or commas are important aspects of the contract (such as when they define the amounts of cash or stock exchanged), it’s important to avoid mistakes. By providing numbers as both numerals and words, such as writing “one thousand (1,000)” in this format, you decrease both the risk of making a costly error.
4. Plan for Litigation
The goal of drafting a good contract is to avoid ending up in court. Nonetheless, you should draft a contract as if you are expecting every term in it to be fully litigated. If a term is important to your client, make sure there is no ambiguity as to what is required, when it is required, who it is required of, and so forth.
Moreover, consider issues such as where you’d like the contract to be litigated (i.e. which venue would be the best choice for your client?); which law will govern the contract; and whether your client prefers mandatory arbitration or mediation. Include provisions that address each of these issues.