The Art of Drafting Contracts: Why Clarity Matters
Attorneys weigh in on how to draft a solid contractBy Nancy Henderson | Reviewed by Canaan Suitt, J.D. | Last updated on October 17, 2023 Featuring practical insights from contributing attorneys Darius Pakrooh and Tara M. Swartz
Use these links to jump to different sections:
- For Effective Contract Drafting, State Clear Goals and Defined Terms
- Use Plain Language and Avoid Legalese
- Make Sure that Contract Enforcement is Unambiguous
- Find an Experienced Contract Drafter
Business attorneys often find themselves helping clients remedy business contracts. “Sometimes a client can overlook the potential traps and pitfalls in a deal,” says litigator Darius Pakrooh. “That’s why it’s important to understand the power of unforeseeable events and get it 100 percent right the first time.”
“If you don’t get it right, it could be unenforceable,” says employment attorney Tara Swartz. “So then you just don’t even have a contract even though you think you do.”
For Effective Contract Drafting, State Clear Goals and Defined Terms
A contract can look great on the surface, says Pakrooh, but might lack pertinent details. “You want to hire an attorney who understands the legal and business landscape you’re operating in.”
A poorly drafted contract can become a costly mistake. “If you’re not a professional or you don’t draft it well, and there’s a dispute, you can be certain that the other side will take advantage of the sloppiness,” says Pakrooh. “Contracts are all about managing and shifting risk.”
First, determine your exact goals and contract terms. For example, if you’re contracting with a service provider to build a website, ask yourself:
- When do you want it delivered?
- How many pages?
- What type of content should appear on each one?
If you arrive at the lawyer’s office with only a vague concept, you can expect to pay more for them to sort through those details for you.
Use Plain Language and Avoid Legalese
A straightforward, clearly stated contract can save time, money, and headaches. Swartz recalls a terminated employee who sued the company for breach of contract. Her client ultimately won, but they had to pay a lot of money they should not have as a result of bad drafting.
To create a well-drafted contract, ask yourself:
- Are industry-specific key terms defined?
- Can you say what you mean in fewer words, or do you need more?
- Is correct grammar and punctuation used?
- Is sentence structure clear?
Some small-business owners try to write their own contracts and end up including too much, Swartz says: “They’ve tried so hard to pull every provision that they ever found on the internet that could be inserted into the contract, and it’s completely overdone.”
Make Sure that Contract Enforcement is Unambiguous
Just because the other party is friendly right now doesn’t mean you won’t disagree later. Include strong directives on how the contract will be enforced, if necessary, and under which state’s jurisdiction.
This can affect the types of damages you can claim if that new supplier or sales representative doesn’t adhere to your joint agreement. Be sure to include a provision about who will pay attorney fees. Otherwise, you could end up owing a lawyer more than the contract is worth to represent you in court.
The COVID-19 pandemic forced business owners to think differently about the unknowns that could make contracts difficult to honor and enforce. Swartz has seen many more force majeure provisions that relieve one or both parties from their obligations under circumstances beyond their control. “Now I think these clauses will become more standardized,” she says.
Adds Pakrooh: “The big COVID-type impact on a contract may not be another pandemic. It may be a strike, or social unrest, that causes business disruption. COVID should be a reminder that the ‘oh crap’ moments are out there, and you really need to address those unanticipated events.”
Find an Experienced Contract Drafter
A contract is a fundamental legal document for any business relationship. It’s important to get it right up front. For help with the drafting process or to have your contract reviewed, use the Super Lawyers directory to find an experienced contract lawyer in your area.
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