Contract Drafting Rules (Part 1)

In previous posts, have discussed various kind of Contracts based on the Nature of Transaction, Mode of Project Delivery and Compensation Methods.

The next step in the journey is to learn How to Draft a Good Contract, which is simple, error free and easy to execute. In this post we are going to discuss 6 important Contract Drafting Rules necessary to form a dispute-free contract

Contract drafting highly specialized skill

Contract drafting is highly specialized skill and requires lot of experience, maturity and wisdom. Moreover, the contract writer should have good understanding of industry practices and in-depth knowledge of contract & procurement laws.

In addition to the above, contract drafting requires a different attitude and mind-set. This is because any extreme (or casual) approach could make the agreement VOID or impossible to operate. Consequently, it may render the contract subject to litigation thereof. This situation may result into wastage of lot of time, money and efforts. Even if the things do not go to such extremes, poorly drafted contracts could lead to lot of confusion and misunderstanding. As a result, it could give room to unnecessary correspondence and contractual tussle between the parties thereby defeating the intended purpose.

Contract should be easy to understand and interpret

Our ultimate purpose should be to draft a contract which is easy to understanding and interpret. Accordingly, we need to draft contractual provisions in such manner so as to avoid confusion, discrepancy, more than one interpretation and misunderstanding between the parties.

We can achieve this objective by followings certain rules while drafting a contract. These rules are called Contract Drafting Rules and 6 of them are mentioned below;

  1. Use appropriate language
  2. Avoid Contradiction
  3. Avoid Duplication
  4. Use References & Cross-references
  5. Mutually explanatory & complementary clauses
  6. Maintain Uniformity and consistency.

In this post let us discuss first two (2) rules. Balance 4 rules shall be discussed in next post

6 Contract Drafting Rules:

1. Use appropriate language:

This is one of the most important Contract Drafting Rule because Contracts are written and interpreted in English or another language. For seamless execution of the contract, it is imperative that both parties draw the same meaning from the contract clauses. Moreover, parties should understand their rights and obligations in the same sense.

In view of the above, let us consider the followings aspects regarding language while drafting a contract

  • Use language which is easy to understanding and interpret.
  • Choose most appropriate words as used in day-to-day communication
  • Say no to complicated vocabulary, harsh or punitive words
  • Say no to emotions and adjectives

2) Avoid Contradiction:

Contradiction means conflict between two or more provisions. Two or more provisions are said to be in contradiction when they lead to different or opposite meaning. For example, one provision says that Time for Completion is 12 months and another provision says that Time for Completion is 9 months

A large Contract generally consists of various documents such as:

  • Contract Agreement
  • Letter of Acceptance
  • Particular Conditions of Contract
  • General Conditions of Contract
  • Technical Specifications
  • Data Sheet & drawings
  • General Technical Requirements

All the above documents are integral part of the Contract. Also, each document consists of various clauses and sub-clauses that define the rights and obligations of the parties. Accordingly, we should draft all such documents with due diligence so that there is no contradiction between various clauses of a particular document or across different documents.

The above is critical because otherwise it may invite dispute. This is because each party starts referring to those provisions which suits them the most. Both parties become adamant and stick to its stand and use all tricks to prove its points. So it becomes very difficult to resolve the matter or to ascertain who is right. The end result is a lot of wastage of time and effort due to unnecessary correspondence, discussion and meetings.

The contradiction arises, because as a normal practice, a contract document is reviewed by different stakeholders. Accordingly, cross-functional team starts making changes in certain provisions of a document or in a particular clause as relevant to them. However, they missed to make corresponding changes in other clauses or in other documents, as deemed necessary in the context. As a result, we end up forming a Contract with lot of contradictory provisions

Please refer to next post for balance 4 rules

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