How to draft a contract




Have you ever tried to draft your own contract? Here are some contract drafting tips for you.

What is a precisely drafted contract?

A contract is an agreement between two or more individuals that creates mutual obligation. The individuals determine the terms and conditions of the contract. The goal is to make a contract tight and less subject to uncertainty and multiple interpretations.

A precisely written contract contains a clear understanding between the parties. It is written in a language that will be interpreted by each reader in the same way. A precisely written contract avoids ambiguity (inexactness). A precisely drafted contract is:

• Accurate: It correctly expresses the deal
• Complete: All possibilities have been addressed
• Exact: Lacks vagueness and ambiguity
• Withstanding critical reviews: Understood in the same way

What contract language should be used?

If you draft a contract, use definite, concrete and plain English. Use short and active sentences. For a better overview, use descriptive headings and separate paragraphs. Complex information should be presented in an annex.

Do you know the difference between words like will, shall, may and must? When drafting a contract, you often use the word shall, because this is the expression that creates a true obligation.

• Shall: Creates an obligation
• Must: Sets a condition
• May: Is an option or a right
• Will: States a future fact

What are contract drafting tips?

Before you start drafting a contact, you should have a look at sample agreements. Also have a closer look at business licenses and passport copies to mention the right contracting parties. Make sure all names are spelled correctly and all parties sign the contract.

If you draft an international agreement, think about the applicable law and the court of your choice. Contracting parties often implement an arbitration clause and choose an arbitration center instead of a local court.

Further contract drafting tips:

• Look at sample agreements before drafting
• Draft clear, specific and focused
• Avoid unnecessary complexity and ambiguity
• Make sure all names are accurate
• Define important terms
• Determine law of choice and arbitration center/court
• All parties must sign the contract
• Pages should be numbered
• Proofread carefully
• Seek legal advice and ask a lawyer

To determine the best options and to avoid ambiguity, seek legal advice. Ask a lawyer to support you with the contract drafting. It will cost less than you expect and will save you lots of money in the long run.