9 COMMERCIAL CONTRACT DRAFTING TIPS When you’re drafting a contract, you’re setting the boundaries and expectations for a business relationship that may continue for years and years. It’s critical that you get the details right. Here are nine contract drafting tips that will help you go from handshake agreement to signed contract.
1. Start with an Outline of the Deal Before you start working on the actual language of the contract, you need to make sure you are clear on what the deal is you are trying to memorialize.
2. Choose a Template to Get Started There’s no need to stare at a blank page. You can start with a template or a similar contract you’ve used in the past. However, you need to make sure you change details such as the party names. Make sure all of the information from your outline makes it into the contract, and that any references other parties are eliminated.
3. Choose Clear Language Commercial contracts are more effective if they are easy to understand. Your goal is clarity. Use precise language. Don’t be afraid to include a list of definitions to make sure everyone has the same understanding. Any ambiguity is a seed for a future conflict.
4. Be Consistent with Terms Contracts need to be clear, but they also need to be consistent. It’s okay if the contract is boring. It’s not supposed to be riveting reading. Don’t use synonyms. Use the exact same words the same way throughout the document.
5. Be Concise The first rule of excellent writing is: Omit needless words. Extra words not only make a contract longer than necessary, but they may also subtly alter the meaning of a key clause.
6. Define the Parties The best practice is to define the parties in the first paragraph and announce how they will be referred to in the rest of the contract. For example, you will want language similar to this:
7. Define the Purpose of the Contract It may be clear to you know what the purpose of the contract is, but it may not be clear in three years after you’ve been promoted and someone else is trying to make sense of the contract you left behind.
8. Dispute Resolution Clause Not every contract is going to have a happy ending. You need to draft a dispute resolution clause that outlines how the parties will handle any disputes. You may want to require mediation or arbitration instead of litigation.
9. Draft with an Eye on Future Litigation When drafting a contract, you need to imagine the entire lifecycle of the agreement. This includes drafting with an eye towards the potential of future litigation. The document you are writing may end up in court being interpreted by a judge or a jury.
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