Top Six Contract Drafting Mistakes
Contract Drafting Mistake #1: Not Writing the First Draft
Typically one person or the other writes the first draft of a contract, and negotiations stem from there. It might seem wise to let the other party write the first draft – as a courtesy – but this will work against you in the end. Since negotiations stem from the first draft, you will want to make it your wish list of contracts, and negotiate down from there, rather than trying to negotiate “up”.
Contract Drafting Mistake #2: Ambiguous Payment Terms
Trust should never come into play when talking about business contracts. When you write a contract, make sure that it explicitly states the exact payment terms with no room left for ambiguity. Businesses or individuals who wait until after a contract is signed to determine payment terms often lose.
Contract Drafting Mistake #3: Failing to be All-Inclusive
When I say that a contract should be “All-Inclusive”, I mean that you should dot every i and cross every t. Not only should the legal terms be covered, but also the specific requirements of both parties. Leave no stone unturned, and your interests will always be protected.
Contract Drafting Mistake #4: Assumptions
We all know that assumptions are dangerous territory, but they are particularly harmful in contracts. A contract defines a “meeting of the minds”, which means that two parties understand exactly what each requires of the other. Any ambiguities will not stand up in a court of law.
Contract Drafting Mistake #5: Leaving Out Boilerplate Provisions
Nearly every contract can benefit from boilerplate provisions, which are clauses that protect the rights and privileges of one or both parties. Examples of boilerplate clauses are Notice Provisions, Integration, Attorney’s Fees, and Modification of Agreements.
Contract Drafting Mistake #6: Failing to Negotiate
Too many people fail to negotiate unfavorable terms in contracts. You have to realize that signing a contract binds you to the terms established therein, and for that reason you must not only be comfortable with the terms, but able to meet them. If you find something in a pre-written contract that isn’t possible or favorable, make suggestions for improvements. And if the other party refuses to negotiate, it is better to take your business elsewhere.
