Your abilities may get rusty if you are an attorney who seldom creates contracts. Follow these easy guidelines to ensure that your contracts are watertight.
What you’ll discover:
1. Request that your customer create an outline.
2. Be explicit
3. Be brief;
4. Be consistent
5. Incorporate recitals.
6. Specify key words and parties
7. Avoid using terms having legal importance accidentally.
8. Use both words and digits to write numbers.
9. Develop a lawsuit strategy.
Many attorneys identify as practicing either litigation or transactional law. In reality, this is what I do. And for many, the difference may be justified. Yet, whether you operate as a single practitioner or in a small business, your job will almost certainly entail some of both. Even if your business is largely focused on litigation, there’s no reason you can’t successfully prepare a simple contract for a client. Every lawyer should be able to do this.
Here are five basic pointers to help you get started on your next contract.
Table of Contents
1. Request that your customer create an outline.
Ask your client to produce an overview of the agreement as they understand it before you begin creating the contract. They may write it down or discuss it with you. You probably won’t design the contract straight from their sketch, but it will establish a template of the key aspects for them. Your client’s outline is also an useful beginning point for addressing other essential topics that they may not have considered but should, such as what should happen if one party breaks the contract or if circumstances alter in any way.
2. Be specific.
Throughout history, ambiguity has been the demise of countless contracts. To prevent this destiny, it is critical that the wording in your contract be clear above all else. Avoid using unclear terminology and flowery wording. Several experienced transactional lawyers I’ve talked with advise that your contract be written in such a way that a layman can grasp the terms of the transaction. It’s best to think like an attorney but not sound like one in this situation.
Similarly, you should be precise in how and when you employ conjunctions (e.g., “and,” “or,” and “but”) and modifiers (i.e. “actively,” “knowingly,” and so forth). For example, if a contract requires a party to “actively market and sell” a product, it’s unclear whether the party must actively sell the product throughout the term of the contract, or if a plan to sell in the future is acceptable as long as the party was actively marketing the product from the beginning. If both are necessary, the contract should specify that the party must “actively advertise and actively sell” the goods. If just active marketing is needed and not active selling, the contract should be phrased in reverse (i.e. “sell and actively market”) to make it obvious that the modification only applies to the last term.
3. Be succinct.
Remove any extraneous words or phrases. This ensures not only that the contract is straightforward, but also that it does not create any unintended responsibilities, circumstances, distinctions, and so on.
4. Maintain consistency
After you’ve defined a party or word, utilize it consistently. For example, if one party is defined as “Buyer” early in the contract, do not refer to them by different names later in the contract. Instead, keep referring to that person as “Buyer” throughout. After all, the aim of contract writing isn’t to make it interesting. Contrary to creative writing, repetition in contracts is a virtue.
5. Include recitals
Recitals are often included at the beginning of a contract and serve to contextualize the agreement. They often begin with the phrase “whereas” (i.e. “Whereas, Buyer seeks to purchase real property from Seller”). While the recitals are not needed, they give sufficient context for an outside party (such as a court or jury) to readily grasp the parties’ purpose.
6. Specify key words and parties
It’s a good idea to define all key phrases as you go. For example, if your contract states that “earnings” are to be shared between the parties, you should additionally define whether you mean gross profits or net profits. Similarly, the contract should state precisely what sales or revenues shall be considered “profits” in the first place. Similarly, if your contract includes the purchase and sale of property, specify the property such that it may be recognized by a third party who is otherwise unfamiliar with the transaction. The same is true when identifying the contract’s parties.
7. Avoid using terms having legal importance accidentally.
Certain words mean more to a lawyer than they do to the average person. Although this may seem simple, it is an important consideration when establishing a contract. After instance, the gap between a word’s legal definition and its common use might cause difficulty in a contract. Labeling a someone as a “agent,” for example, might have legal ramifications in terms of the individual’s legal ability to act on behalf of a party. As a result, you should exercise extreme caution whenever you employ a term that you identify as having a particular legal meaning. Use another term if you do not plan to use that precise legal meaning.
8. Use both words and digits to write numbers.
It’s all too easy to make little mistakes while examining your contract, such as misplacing a comma, missing a zero, or forgetting a decimal point. But, when such decimal points, zeroes, or commas are critical components of the contract (for example, when they describe the quantities of cash or shares traded), it’s critical to prevent errors. You reduce the danger of making a costly blunder by presenting numbers as both digits and words, such as writing “one thousand (1,000)” in this style.
9. Develop a lawsuit strategy.
The purpose of excellent contract writing is to avoid going to court. Yet, you should construct a contract as though every phrase in it would be fully disputed. If a word is crucial to your customer, make certain that there is no ambiguity about what is needed, when it is necessary, who is required, and so on.
Consider where you want the contract to be litigated (i.e., which venue is ideal for your client? ); which law will govern the contract; and if your client wants obligatory arbitration or mediation. Include clauses that address each of these concerns.
