© Weightmans LLP Contract Drafting – DOs and DON’Ts Martin Vincent Partner I date

© Weightmans LLP 2 Basic Requirements for a Contract 1.Offer; 2.Acceptance; 3.Consideration; 4.Intention to create legal relations; AND 5.Certainty

© Weightmans LLP 3 Offer ▪Offer or invitation to negotiate? ▪Invitations to negotiate ▪Incorporating terms -offeree aware of terms; -after performance -via course of dealing;  Tips -single document; -ensure standard terms and conditions are plainly visible (not on the reverse of a document sent by fax/pdf); -sign last; -word communications as invitations to treat rather than offers capable of acceptance or use plain English to describe what is meant;

© Weightmans LLP 4 Acceptance ▪Acceptance/counter offer; ▪Battle of the forms ▪ correspondence ▪Performance before agreement ▪Tips -finality of acceptance; -acceptance by behaviour (performance); -ensure clarity throughout;

© Weightmans LLP 5 Consideration ▪Goods/services for cash; ▪Not necessary to be adequate; ▪Past consideration (when varying terms); ▪Tips; -Always include monetary consideration (£1); or -Draft as a deed (limitation and consideration points); Intention ▪Intention to create legal relations is always assumed in commercial agreements.

© Weightmans LLP 6 Certainty ▪Filling the gaps (MRI Trading AG v Erdenet Mining Corporation LLC [2013] ); ▪Best endeavours (Jet2.com Ltd v Blackpool Airport Ltd [2012] ); ▪Tips -Would several small agreements work better than one comprehensive agreement to aid certainty?

© Weightmans LLP 7 Form of Contract ▪Written; ▪Oral ▪ ▪On line ▪By conduct

© Weightmans LLP 8 Contract Formation ▪Conditions precedent ▪Legal capacity ▪Illegality ▪Proper form ▪Entered into by person lacking authority

© Weightmans LLP 9 Pre-contractual Representations ▪Sales literature; ▪Discussions; ▪Correspondence; ▪Restriction of liability

© Weightmans LLP 10 Pre-contractual documents ▪Letters of intent; ▪Memoranda of understanding; ▪Heads of agreement; ▪Heads of terms. ▪Usually non-binding ▪Strict interpretation of wording

© Weightmans LLP 11 Terms implied by statute ▪Supply of Goods and Services Act 1982 (SGSA) ▪Unfair Contract Terms Act 1977 (UCTA) ▪Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) ▪The Provision of Services Regulations 2009 (POS Regs) ▪Bribery Act 2010

© Weightmans LLP 12 Terms to Consider Services ▪Clear description of services; ▪Creating obligations; ▪Standard of services; ▪Deliverables; ▪Time for performance; ▪Intellectual Property Rights (IPR) ▪Charges ▪VAT ▪Payment (interest & deductions) ▪Boilerplates

© Weightmans LLP 13 Terms to Consider Goods ▪Description of goods - quality; ▪Quantity – tolerances ▪Acceptance/rejection of goods ▪Delivery of goods ▪Price – items included ▪Payment terms ▪Risk and title; ▪boilerplates

© Weightmans LLP 14 Standard terms and conditions? ▪Pros Opportunity to introduce favourable terms. Avoid the time and expense of drafting and negotiating bespoke agreement. Provide consistency throughout business and familiarity with how contract works. Standardisation allows businesses to utilise more junior staff ▪Cons Greater restrictions imposed by UCTA. Can lead to confusion over which terms and conditions are effective if other side also has standard terms and conditions. Over use of standard terms in unsuitable contracts. Require regular review in respect of updates to the law and changing business practices. May be a requirement for more than one standard set of terms and conditions depending on the business’s purpose.

© Weightmans LLP 15 DOs ▪Ensure absolute clarity when making offers and acceptances. ▪Where appropriate include all terms in one document. ▪Remember to include mention documents/information relied upon to enter into the agreement. ▪Ensure that consideration is recorded accurately in the agreement. ▪Remove/minimise uncertainty as far as possible. ▪Consider whether there ought to be conditions precedent which require satisfaction before commencement of the agreement. ▪Ensure individual on the other side has authority to enter into contract. ▪Carefully consider pre contractual representations and documents and ensure that agreement is reached as to their applicability in order to draft agreement accordingly. ▪Consider terms implied from statute and whether they ought/ought not to apply. ▪Very carefully word each of the terms covered in the ‘terms to consider’ slide. Consider from both buyer and seller points of view. ▪Where standard terms and conditions are proposed as being suitable consider whether it is economical for a separate agreement incorporating all terms may be beneficial.

© Weightmans LLP 16 DON’Ts ▪Make offers where it can be helped, use invitations to negotiate. ▪Do not accept offers until terms are agreed unequivocally. ▪Agree to use ‘best endeavours’ to do something when it could be narrowed. ▪Create obligations upon one’s self in pre-contractual documents that are unnecessary. ▪Rely on statutory implications where clarity could be added by use of an agreement ▪Sacrifice detail in an agreement for the sake of containing all terms in one agreement where 3 or 4 agreements covering in detail each stage of the contract would assist.