Data from the International Association for Contract and Commercial Management, or the IACCM, says approximately nine percent of contracts that exist will most likely be part of some form of significant dispute or claim.
While the IACCM numbers don’t necessarily translate into lawsuits, it’s important to note that the nine percent does translate to lost working hours, higher wage costs, and lost revenue in general. This means contracts themselves should always be created carefully and correctly.
Here are a few key tips you should remember when writing up a contract.
- Don’t forget your lawyer. Perhaps one of the most important steps in contract writing is to make sure your lawyer is there to iron out details. His or her knowledge on the proper usage of terms and foresight on various issues and implications allow him or her to guide you and make sure you’re on the right track.
- Prepare your outline for your lawyer. This may not necessarily be the final draft of the document, but it’s important to write out or discuss an outline of the intended contract. This helps your lawyer and everyone involved to better understand the agreement and the overall intent of the contract. An outline or rough draft can also serve as a guide to the critical points you know need to be addressed.
- Clarity counts. A lot of contracts “die” because of ambiguity. This means the language you use when writing the contract must be clear at all times. Don’t use terms that are ambiguous and flowery. The terms should be so clear that even a layperson is able to understand what the agreement entails.
- Be concise and consistent. Don’t use unnecessary phrases or words if they don’t really matter. This ensures that your agreement will be straightforward. This also avoids creating implied distinctions, conditions, and obligations. Also, if you introduce a term or a party in the document, be consistent in using them. If one party is known as the “Buyer” early on, then that party should be the “Buyer” throughout the contract.
- Should you use recitals? Ask your lawyer if it helps to include recitals when your contracts begin. These normally provide context for the overall agreement. They aren’t required in most cases, but these can definitely help a jury or a judge understand the intent of both parties quickly.
- Speaking of definitions, make sure important parties and terms are properly identified. It’s a good idea to have definitions for terms that are important. For instance, if your contract seeks to split “profits” between the two parties, then it’s important to specify whether or not these “profits” are net or gross profits.
- Remember, don’t use words with a lot of legal significance if you don’t know how to use them. There are particular words in a lawyer’s dictionary that will have different implications when used in a different way. Do consult your lawyer to check if the things you’ve included so far are clear.
- Plan for litigation, even though you’re writing a draft now. When you make a contract, even if it’s a draft, plan as though you’re going to be litigated in the future. This allows you to think ahead to make sure all things you need to clarify are already clarified.
Remember that despite the somewhat technical nature of contract writing, it’s very possible, with the help of a legal professional, to create a useful contract you are sure to be able to present to your client. Click here if you’re in need of further legal assistance.