This article is written by Pallavi Chandrasekhar, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
Table of Contents
Introduction
Contract drafting for any newcomer in the corporate law field is quite challenging. When I was given my first contract drafting assignment at my job; a few sample draft agreements were shown, and I was asked to draft one similar to those samples. No training was given on the basics of contract/agreement drafting. This led to several mistakes being pointed out by the superior who was reviewing my contract before sending it to the client. This Article, thus, aims at talking about certain common mistakes made by drafters while drafting contracts. It further deals with ways to avoid making those mistakes.
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Not knowing your client and her needs
- The first mistake that can be made while drafting her first agreement was not knowing her client’s needs. If you do not know who your client is, its background, whether it is technology company, a manufacturing company, a company that values its trademark and needs all the information to be confidential, etc. you would not know what clauses have to be drafted favoring your client and you can end up drafting the agreement (contract and agreement are used interchangeably in the article) not benefitting your client. It is always a good idea to look up the client’s details on its website, or searching for its details on google, and when neither works, just asking the client about its background.
This can also be fixed by carefully checking the client’s emails. You check the name of the client, fill in her details at the starting of the agreement (where the party names are detailed). For example: If you are drafting a software development agreement between Apple Inc. and Narayan (a software developer and your client), but you did not check the client details and his needs from the agreement, you might end up drafting an agreement favouring Apple Inc. Your client. Narayan, probably would like the intellectual property rights (IPRs) in the software to stay with him, but you drafted it for Apple stating the IPRs would be with the company. This if not reviewed by a senior, before sending it to the client, could cause problems for the client in the future. This is because clients might not review their contracts trusting their lawyer. They would email it to the other party and lose out on certain rights which could have been easily in their favour had it been drafted properly.
- Another mistake that drafters make is not realizing the difference in bargaining power between the two parties. In the Apple and Narayan example, Apple Inc. is a world renowned multinational corporation. If your client insists on certain clauses in the contract to be in his favour, which is disagreeable to Apple, Apple can always replace Narayan and get another software developer. But your client Narayan would be benefited greatly by developing software for Apple and adding it to his repertoire.
- It is also important to include any changes requested by the client, in the draft agreement. Several times in the chain of emails, some changes requested by the client can be missed. For this, one can always call up the client and request the email to be resent again or check the email thread thoroughly for any missed communication from the client.
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Not proofreading and formatting
- The second most common mistake made by drafters is that many times, one is so fatigued after making the first draft agreement (especially if the agreement runs for several pages), that the drafter just feels like emailing the client her draft and finishing the work. However, if one does not proofread her agreement, one would omit rectifying a lot of errors or clauses/phrases missed out. The drafter always believes that she has written certain words and made the agreement to the best of her ability. However, when someone else proofs read her work, several mistakes can come to light.
For example: a) the details of the parties, important dates, could have been left blank by the drafter to be inserted later, but forgotten to do so, b) making spelling mistakes and grammatical mistakes, c) forgetting to insert some clauses, etc. These give a very poor impression of the drafter and would not make the client respect the lawyer drafting the contract.
To avoid this mistake, it is best to take a few minutes break after drafting the agreement, and then proofreading it. The best idea would be to make a colleague or friend read the draft and point out spelling or grammatical mistakes. If you try to proofread your own draft, you would not find the errors that another colleague with an objective mind can see. If a second person cannot proofread the draft, you can take a break and look at the draft after a couple of hours.
- Furthermore, many experienced lawyers do not know how to use the formatting tools in Microsoft Word or any other word processor. Their clause and paragraph numbering are incorrect or typed out without using auto numbering or not numbered at all. This makes cross-referencing the clause or paragraph number in the agreement or a different related agreement extremely difficult. Once the whole agreement is finalized to be printed and signed, it looks untidy on paper because of poor use of formatting on the word processor.
To solve this problem, it will take some practice with getting familiarized with different formatting tools on any word processor. One can learn these tools online or ask an experienced friend to teach you.
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Not using plain english
- The third mistake made by not just beginners, but many experienced drafters is not using plain English. When this author was studying LL.M in the U.S., there was a lot of emphasis on using plain simple English while drafting contracts, writing memos, briefs, even legal essays and articles. Words such as ‘hereinafter’, “hereinabove’ or using Latin phrases should be avoided. Many lawyers believe that the richer their vocabulary in the agreement or their briefs or memos in general, the better the lawyer they appear to the client. Some lawyers believe that if they write in plain English, their clients would understand everything and would not need a lawyer for such simple agreements. However, in most places, simple English is really appreciated.
- Secondly, the use of short sentences, if possible, in active voice is preferred rather than using long sentences in passive voice. Such long sentences make the reader forget and get confused what the author/contract drafter is actually trying to say.
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Missing out on certain boilerplate clauses
Mostly a previous draft is referred to while drafting any contract. If for instance, the sample or draft agreement that the drafter is referring to, misses out on certain boilerplate clauses such as waiver, dispute resolution clause, or the indemnity or force majeure clause; the drafter is bound to miss out on those clauses as well, if she is not careful. Thus, her client would suffer in her contractual relations due to the drafting lawyer’s fault.
To prevent this mistake, it is a good idea to have a boiler-plate clause checklist. When one is finalizing a draft, one can always look at the checklist and see if an intellectual property or payment terms, or termination clause has been missed while drafting the agreement. This checklist could include all clauses in the agreement starting from the names of the parties, recitals, scope of the agreement, payment terms, to the miscellaneous clauses such as waiver, severability, notice, etc.
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Making the contract too one sided favoring your client
As an advocate, one is always working for the best interest of a client. Hence, there is a tendency to draft the agreement that favors the client. For example: in the Apple & Narayan Agreement, Narayan’s lawyer would want all intellectual property of the software to vest with Narayan. The lawyer would further want Narayan to be able to terminate the agreement anytime or get high damages from Apple if it breaches the contract. However, Apple’s lawyers would not sign an agreement that does not favor Apple at all. They would hire another software developer to do their work and not someone who insists on many one-sided clauses in his agreement.
But, one must remember that in contract negotiation and drafting, one needs to come to a common ground where both parties are agreeable to the terms. The aim would be to get the contract signed and not win the case for your client. In the Apple example, a good lawyer would make sure that her client Narayan gets Apple to sign the contract for him. At the same time, given Apple’s superior bargaining power, the agreement should not make her client lose out on his rights completely either. Therefore, a good contract lawyer would ensure that the agreement is signed and her client is benefitted from the agreement.
Hopefully, after reading this article, the reader is in a better position to draft an agreement for her client and avoid unnecessary mistakes. While drafting a contract is not very difficult, making careless mistakes can be prevented by taking certain precautions such as those listed here.
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