This article is written by Kapil Nikam, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here he discusses “5 Reasons for Non-lawyers to learn contract drafting work and how it can help them in their careers”.
Contract drafting work is very important and crucial in commercial transactions. In our society, there are misconceptions that contact drafting work is only related to lawyers. C Contact drafting would be beneficial for non-lawyers also. In commercial transactions the only lawyer is not involved, the business team, accounting and taxation team Secretarial teams are also involved. Also, it is dependable upon in which sector you are working. For example in the infrastructure sector, there are multiple types of contracts and agreements are entered between and amongst various stakeholders from bidding stage to execution of Concession Agreement and thereafter also various agreements are entered generally legal consultants are appointed by the Companies or in-house legal teams are responsible to execute said contracts and taken care of legal-related things. However, for the execution of certain contracts only legal team and lawyers are not involved since loan agreements, financial agreements, agreements for severity creation finance team and business development team are also dealt with various agreements. In this article, we will see reasons for non-lawyers to learn contract drafting and how it can help them in their careers.
Reasons for non-lawyers to learn contract drafting:
1. To understand the basic legal concepts
In every drafting and contract drafting work there are various basic legal concepts involved. Non-lawyers are not familiar with certain conceptions however, in terms of legality of the contract said concepts are very important. For example, in every contract or agreement, there is a definition or interpretation clause. Some terms are capitalized also some terms are required to be defined properly. Non-legal fraternity does not understand the implication of said basic concepts, so to understand the basic legal concepts it is necessary to learn contract drafting skills to non-lawyers.non lawyers are well in their subject domain. However, to learn the entire contract one needs to understand basic concepts since that is an important aspect to understand the contract or agreement entirely.
2. To learn the entire transaction
Anyone can not better understand any contract without learning the entire transaction. For the conclusion of any agreement only commercials terms are not important but various clauses wherein legality is involved are also important. Suppose in Share Purchase Agreements Condition Precedent, Condition subsequent are important clauses, also clauses like indemnity, a warranty which has implications on the entire transaction. Any deal can not be completed without understanding the entire contract. Apart from the drafting of the contract, there are various factors involved in every translation such as the implication of stamp duty, dispute resolution clause these are important factors so that to learn the entire transaction is one of the important reasons for non-lawyers to learn contract drafting.
3. Mitigation of Risk
Risk mechanism is one of the important factors for every organization. For the drafting of contract and agreement, one needs to look into risk factors. Risk mitigation is taking steps to reduce adverse effects. Non-lawyers can learn drafting work then they cleverly mitigate certain risks. Various types of compliances are required to be done. Mere drafting of the contract is not important. Some contracts need to be provided to concern authorities. Sometimes failure to non-compliance has serious ramifications upon organization so that to mitigate the risk it is very important to non-lawyers to learn contract drafting.
We have seen the compliances aspect briefly in the above point. Compliances are a very crucial factor in every industry. In the event of a failure the compliances there may be a penal liability. We will see some examples to elaborate on the compliance aspect while drafting the contract. Suppose X Company is acquiring Y Company during the process of due diligence it is observed that Y Company has not complied it’s CSR obligations under the provisions of the Companies Act, 2013, in such event X Company need to take specific indemnity from Y Company. Mere mentioning in Contract if Y shall be liable for the failure of the non-compliance is not suffice since the Company shall be responsible. However, you can seek an undertaking that if any criminal action is taken by the registrar of companies in such event directors of Y shall be liable. Also, there are certain compliances which are important for the commercial aspect and its effect on the reputation of the Company. Compliances under the Contract Labour Act and labour laws are very crucial while drafting the Contract anyone shall be very careful. If your organization or Company is a principal employer then there are various compliances are required to be done. In view of aforesaid, though an in house legal team or legal consultant is involved in the contract drafting process for compliance, prospective non-lawyers should learn the contract drafting process.
5. Financial implications
Every agreement and contract has financial implications that may be stamp duty perspective, taxation or potential damages in the event of a breach of contract. The non-legal person should have sound knowledge about the financial implications of their organization. For better understanding the financial implications on the organization from the various perspectives it is necessary for non-lawyers to learn contract drafting.
We have seen aforesaid reasons why non-lawyers learn contract drafting working. Anyone can get a question about whether learning of contract drafting would be helpful in a career. To answer to said question simple answer is that it is too useful from a career perspective to learn contract drafting work.
As seen hereinabove there are various functions involved at the time of execution of contract or agreement. Company Secretary, Chartered Accountant, Business Development team, Financial and account team, the persons who are handling taxation matters are connected with the drafting of contract work. Though they are experts in their area if they learn the contract drafting work it would be beneficial from them. There are various important factors while drafting the contract if anyone understands the entire contract explicitly it would be helpful for him or her in a career.
There are various meetings and conferences organized during the process of contract drafting. Some contracts are very crucial in infrastructure sector Concession Agreements are for a longer period if non-lawyers have a sound knowledge about the contract drafting related work they will effectively involve in said meetings even though they are not a legal person but they can provide important inputs to protect their organization and every organization has some key people they are well aware that who is effective working in the process so that definitely for yearly assessment these factors are always considered by the management so that non-lawyers learn the contract drafting work it would be helpful in their careers.
Some people are very good at verbal communication but they are not good drafters. Apart from contract drafting work, there is various correlated work pertaining to the relevant contract. We have to rely upon various provisions and clauses after the execution of the contract. Sometimes, legal people are very busy in their work, certain organization have very limited manpower in such event if non-lawyer has sound knowledge and better understanding of the provisions of the contract then they can write letters, replies to the other party or relevant authorities without taking assistance of the in-house legal team so in career prospective contract drafting work would be helpful for non-lawyers.
There are certain contracts they are very simple such as nondisclosure agreement, certain term sheets, some leave and license agreements if you have good knowledge about the contract drafting then anyone can without taking assistance of lawyers freeze the structure of the agreement and same can be forwarded for vetting purpose only in this way anyone can do productive work and same would be helpful in career.
We have seen above how contract drafting work is beneficial for non-lawyers in their careers. One important aspect to learn contract drafting is that it would be beneficial for day to day life also.in our routine life also we encounter various times contract drafting related work such as the execution of leave and license agreement, agreement to sell and sale deed for this purpose we need to understand contract drafting and that would be helping our career as well as individual growth.
We have seen five reasons why non-lawyer should learn contract drafting work and how it will help them to enhance their career. Gone are those days where only lawyers were experts in contract drafting work. Nowadays, other professionals are also involved in contract drafting work as it is imperative in professional as well as personal life. It is important to learn contract drafting work to non-lawyers also. If any non-lawyers eager to learn contract drafting work they can easily learn, there are several modes available to learn contract drafting work. It is not necessary to attend classrooms; anyone can learn contract drafting by online classes also. We have seen reasons for non-lawyers to learn contract drafting work and how it can help them in their careers.