Texas businesses depend on written contracts to conduct their operations. A contract may be used to describe the relationship with a supplier of key parts or to describe the relationship with the company’s distributors—or any of many different agreements that are necessary to sustain stable business relationships. Some businessmen—especially those who have spent many years in their business—believe that they can draft their own business agreements and that a lawyer’s services are unnecessary.
The purpose of this post is not to dissuade businessmen of this conclusion; instead, this post is an effort to explain the elements that make for enforceable contracts that reduce the costs of doing business and do not raise those costs by creating unnecessary ambiguity that will lead to expensive litigation.
Tip No. 1: Understand the deal and the client’s interests
Perhaps the most important tip is this: an attorney drafting a contract for a client must understand every detail of the intended transaction and must also understand the client’s potential risks and hoped-for advantages. This understanding can only be obtained by close questioning of the client and by asking questions about apparent ambiguities and inconsistencies. This preparation should occur before the drafting begins, not after the agreement is signed.
Tip No. 2: Drafting a contract from scratch vs. using a previous form or template
The Internet provides a wide variety of template contracts, and many attorneys retain files of contracts they have previously drafted for the client. While experience can be a helpful guide for the present, no prior contract should be accepted without a careful review by the drafting attorney. Some provisions from the previous agreement may work nicely in a new context, but many previously-used contracts may contain terms that do not fit the current situation or properly express the client’s interests.
Anyone who uses a form or template should examine every clause—indeed, every sentence and word—to ensure that the present contract fits the client’s needs and does not unintentionally inject unnecessary or confusing terms into the present deal.
Tip No. 3: Be clear and precise
Perhaps no pair of words better describes a well-drafted contract than “clarity” and “precision.” The draft person’s goal should be the accurate expression of the intent of both parties in unambiguous and clearly stated modern English. Colloquialisms and jargon should be avoided; if a specialized term is needed, that term should be defined in the initial sections of the contract, and it should be used in the same manner wherever it appears in the draft.
Tip No. 4: Read the contract before it is signed
Every careful attorney will want to be certain that they read the final draft carefully before it is given to the client for approval and signature. No matter how much care was taken in the initial drafting, errors can easily sneak into even the most painstaking prose.
Solid legal advice
Any person who needs a contract to express the terms of a newly negotiated agreement should consult an experienced business attorney to review the contemplated transaction. A knowledgeable attorney can offer helpful advice on structuring the transactions and on incorporating those terms into an accurate and easily enforceable contract.