Contract Drafting and Review: A Guide for Business Owners
Contracts are an essential part of doing business, and they can be complex documents that require careful drafting and review. Whether you are creating a new contract or reviewing an existing one, it’s important to understand the key elements that should be included and the potential pitfalls to avoid. In this guide, we’ll provide an overview of contract drafting and review, and offer tips for ensuring that your contracts are clear and legally enforceable.
Drafting a Contract
When drafting a contract, there are several key elements that should be included to ensure that the contract is clear and enforceable:
- Identify the Parties
The contract should clearly identify the parties involved, including their legal names, addresses, and other relevant details. It’s important to make sure that all parties are correctly identified to avoid confusion or disputes down the line.
- Define the Terms
The contract should clearly define the terms of the agreement, including the obligations of each party, the payment or compensation that will be provided, and any deadlines or milestones that must be met. It’s important to be specific and clear about the terms of the agreement to avoid misunderstandings or disputes later on.
- Include Boilerplate Provisions
Boilerplate provisions are standard clauses that are included in most contracts, such as choice of law, dispute resolution, and attorneys’ fees. While often overlooked, these provisions are important to include to ensure that the contract is legally enforceable and that the parties understand their rights and obligations. For example, an attorneys’ fee clause is generally a good idea. By requiring the losing party to pay both parties’ attorneys’ fees, it tends to discourage unreasonable “scorched earth” behavior by either party.
- Consider Other Provisions
Depending on the nature of the agreement, there may be other provisions that should be included, such as confidentiality provisions, non-compete clauses, or warranties and representations. It’s important to consider all relevant provisions and include them in the contract as necessary.
- Consult a Business Attorney
It’s always a good idea to consult a business attorney when drafting a contract. An experienced business attorney can help you identify any potential issues and provide guidance on how to revise the contract to ensure that it is clear, comprehensive, and legally enforceable.
Reviewing a Contract
Reviewing a contract can be just as important as drafting one, as it allows you to ensure that the terms of the agreement are clear and legally enforceable. When reviewing a contract, consider the following:
- Read the Contract Carefully
It may seem obvious, but it’s important to read the entire contract carefully to ensure that you understand all of the terms and provisions. Don’t assume that everything is straightforward or that you can rely on verbal assurances – make sure that everything is clearly stated in the contract. If you see something you do not understand, be sure to look it up or ask an attorney.
- Look for Ambiguities or Omissions
When reviewing a contract, look for any ambiguities or omissions that could lead to misunderstandings or disputes. If there is any language that is unclear or ambiguous, consider revising it to make sure that the meaning is clear.
- Check for Consistency
Make sure that all of the terms of the agreement are consistent and that there are no conflicting provisions. If there are inconsistencies, revise the contract to ensure that all of the terms are consistent and clear.
- Consider the Legal Implications
When reviewing a contract, it’s important to consider the legal implications of the agreement. Make sure that the contract is legally enforceable and that it complies with all relevant laws and regulations.
- Consult an Attorney
Finally, it’s always a good idea to consult an attorney when reviewing a contract. An experienced business attorney can help you identify any potential issues and provide guidance on how to revise the contract to ensure that it is clear, comprehensive, and legally enforceable.
Conclusion
Contract drafting and review are essential elements of doing business, and they require careful attention to detail to ensure that the terms of the agreement are clear, comprehensive, and legally enforceable. Whether you are drafting a new contract or reviewing an existing one, it’s important to consider all of the key elements and consult with an experienced business attorney to ensure that your contracts are in compliance with all relevant laws and regulations.
