06/14/2024

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Mastering the art of contract drafting

Mastering the art of contract drafting

This article has been written by Stuti Agarwal and deals with the elements, skills and framework of a contract that a lawyer needs to keep in mind while drafting a contract. The aim of the article is to provide insights into mastering the art of contract drafting and why you should learn this.

Introduction 

The freedom to have a contractual relationship and to enter into contracts is something which society allows us legally and constitutionally. Inculcating this freedom into contract drafting practically in the form of legally binding and operative contracts is the “art” we are talking about in this article. Legal contracts are drafted by qualified lawyers who have an understanding of the laws which govern the contractual relationship between two parties in a country along with other industrial norms and requirements required to execute the concerned transaction.

A contract enforces the moral obligation of the parties involved to perform their respective promises and for this reason, a binding contract is needed to enforce the promises between the parties. It ensures that a party adheres to the moral obligation and further gives security to the parties regarding any breach thereof. A contract usually provides this security once it is executed and registered as per the laws of a country. Disputes are bound to arise in a commercial relationship between the parties and for this purpose, a contract backing such a relationship helps to find the course of action under a particular circumstance and helps parties resolve the issues arising in the course of their dealings.

The corporate side of a legal career is essentially contract negotiation and drafting in accordance with the needs, interests and requirements of the clients. Corporate lawyers are often seen drafting various kinds of contracts according to the transaction involved. It can be a sale-purchase agreement, shareholders’ agreement, share subscription agreement, general business agreement, loan agreement, and a plethora of other agreements.

The art of contract drafting can be mastered by remembering a basic mantra: “Capture what the client wants clearly, keeping in mind the client’s interests and the legal viability of the proposition.”

What do you mean by contract drafting

Any commercial relationship between the parties is governed by the law of contracts. A contract is the evidence of the terms and conditions regarding the understanding between the parties entered. It is the building block of trade and commerce in the country. Whenever such understanding between the parties is reduced into writing, the whole process and art of presenting such understanding in writing, which involves a lot of stages, is known as ‘contract drafting’. It is known and referred to as an ‘art’ because it is a skill which corporate lawyers master along with experience. The act of capturing the requirements of clients in a legally viable manner, taking care of the words used, is a very sensitive action and thus, drafting a perfect contract is an ‘art’ which is refined by consistency, diligence and experience.

It should be known to the corporate lawyers that there are two ways in which a contractual understanding between the parties can be enforced, either through a written contract or through an oral contract. It is advisable for the clients to go for a written contract as it helps in enforcing liabilities, breaches and other dispute resolutions in case of a future dispute with respect to the contractual relationship entered into. A very important question which is about the “evidence of contractual relationship or the understanding between the parties” is answered when a person opts for a written contract. A duly signed and registered document is, therefore, entered into by the parties to make future dispute resolution easier and to be on a safer footing.

Principles of contract drafting

There are certain pre-conceived principles which are not officially considered as the law points but have been construed by the contract drafters as important for the process. These principles have been developed in a course of time when the stakeholders have observed certain norms as a standard practice in the process of contract drafting.

Before commencing the contract drafting process, the drafter must be clear on the clauses he/she intends to include in the draft. It is important to do this exercise before starting to draft a contract because it helps in streamlining the intention and makes the contract watertight. There are a variety of deemed standard clauses in a contract which however, may vary in different types of contracts. The primary clarity on this helps kickstart the process in the right direction.

Legal interpretation, consequences, and applicability must be clearly borne in mind before drafting a particular contract. It should be drafted with a mindset that if in future the parties go into litigation and the courts tend to interpret the contract, then such an interpretation must weigh towards the interest of the parties. The drafter must be cautious about the appropriate use of the words and should be clear of its meaning while being in the process of drafting. It should also be noted that there are some construed terms that are so strongly implied as a matter of public policy that they become part of the contract unless the express terms of the agreement clearly exclude them. These rules must be broadly kept in mind by the drafter while thinking of the interpretation at the stage of drafting itself.

Some of the common principles which the industry stalwarts are in favour of practising are:

Usage of simple language 

The language of the contract which is being drafted by a corporate lawyer shall not be in verbose. A contract should not reflect the vocabulary proficiency of a person. This means that the sentences shall not be misconceived and the contract shall not reflect fancy words or very complex words to enumerate the understanding between the parties. Rather, the contract should contain plain simple language conveying the understanding between the parties. The parties are concerned about having their mutual agreement documented, and it will not be in the best interests of the lawyer if the client has to refer to a dictionary while reviewing the contract. Therefore, it is highly advisable to keep the contract as simple as possible.

No scope for ambiguity

The draft of a contract should be free from any sort of ambiguity and there shall be no scope of doubt with respect to a particular term or a condition, especially in the operative part of the contract. The role of a corporate lawyer is to frame the understanding of parties to a transaction effectively in the draft of a contract. Any misconception, ambiguity, mistake or any other discrepancy can become a point for dispute in future for the parties involved. This is the main reason why corporate lawyers are the building blocks of the corporate transactions as any transaction stems after they draft a contract to define a relation between two businesses. Commercial understanding, scope of work, dispute resolution mechanism, termination mechanism, conditions precedents etc. are some of the few clauses which need to be clearly captured in the contract.

Ask questions to the client

The contract drafters shall clarify any doubts with respect to the contractual understanding to be captured. They shall feel free to nudge their clients for clarification because contracts need to be accurate with respect to such understanding. Sometimes, what parties decide between themselves is not put forth in front of the lawyers and they are only briefed about such understanding. This at times, raises concerns regarding some gaps, some legal nuances or any ambiguities when recording such understanding practically in a contract. Therefore, clarifying doubts is advisable over putting inaccurate facts and understandings in the draft. A pro tip is to check with the client then and there while drafting the contract or whenever you are stuck.

Define the terms used repeatedly

It is a common practice in contract drafting that the terms which are deemed to be used repeatedly in the body of the contract be defined the very first time of such usage. This practice helps in avoiding unnecessary repetition of similar looking sentences to refer to a definite thing or scenario. For example, the agreement which is being drafted is usually defined in the very beginning of the contract to refer it further in the draft with that name assigned to it. The defined term is usually put within double quotes and is put in bold. Usually, words/ sentence saying “hereinafter referred to as “___” is used to define such a term. Such a defined term is defined with the first letter capitalised. However, it is not compulsory to use the above mentioned sentence before defining the term. It should be kept in mind that whatever form is used to define must be used uniformly throughout the draft of the contract.

Use defined terms carefully and with care

After a term is defined, the usage of the same must be done very carefully throughout the draft of the contract. Whenever a word of common English language is used as a defined term, in that case, whenever such term is to be used in the terms of the common parlance and not with respect to the definition assigned to it in the draft of the contract, then it shall be used with a first letter in lower case.

Brevity, precision and uniformity

Contract drafting requires the principle of brevity to be followed extensively. Contract drafters should keep in mind that they write only what is required in a particular clause. The contract must be watertight with respect to the information which is actually needed to strengthen the enforceability. Use of shorter sentences is advisable for better understanding. It should always be kept in mind that the people who intend to enter into a contract are not legal professionals and thus, the usage of very complex language will not help them understand the contract. Therefore, using small sentences and required information shall be incorporated in such contracts.

Maintaining uniformity throughout the draft is considered professional and necessary. Therefore, it is a proofreading exercise for the drafter to check that the uniformity with respect to a certain style of writing, terms, presentation etc. must be followed. Though it is not a statutory or legal requirement, it is considered a professional practice and extends a good impression on the receiver of the draft.

Precise language provides firm standards for compliance and enforcement. It avoids vagueness such as “reasonable care”. Here, it is unclear as to how one should measure reasonability. These kinds of terms which breed ambiguities and leave room for assumption and for parties to play on their own, must be minimally used and rarely resorted to, usually in the times of no other way to go instead.

Making the parties adhere to the promises

Accountability for the actions and promises made under a contract is an essential requirement of a contract. The parties rely on the representations, promises and covenants made during the negotiations. Therefore, the art of capturing those representations and making them legally enforceable is the quality of a good contract. It is important to write consequences of breach and the mechanism to deal with any future disputes that might arise in the contractual relationship between the parties.

Avoid inconsistency

It is very important for contract drafters to maintain credibility throughout the draft of the contract. There should not be a scenario in which opposite things are written in two parts of the contract. Such mistakes usually arise when the understanding with respect to the terms is not clear or there exists some ambiguity with respect to a certain term. Not only this, sometimes during the course of making a contract, the drafter gives multiple sittings to the draft and sometimes it may slip the mind as to what is written before. Therefore, a background must be revised before resuming the work in multiple sittings. This can also be avoided anyway as the drafter is expected to carefully proofread the draft before sending it across to the client or the opposite party. 

Avoid vagueness

A good contract should answer all the questions that are associated with the matter under discussion. Vague sentences to which a person cannot find an answer to must not be formed as a part of a good and efficient contract. For example, if a drafter is putting the parties are entering into this contract against a consideration, then he/she must answer – (i) the amount of consideration (ii) mode of payment (iii) currency of payment (iv) date by which it is to be paid (v) manner in which it is to be paid i.e., in tranches, in part, after completion or any other manner as decided between the parties to the contract. Therefore, there is no scope of vagueness as a contractual relationship is legally backed only when it is based on definite terms which are clearly understood by the contracting parties.

Be ready for multiple versions and stages before finalisation

Contract drafting is a process in itself. It starts from the initial meeting where the transaction is contemplated between the parties and the way forward is decided. Thereafter, the corporate lawyer involved for one side of the parties drafts the initial draft of the contract and shares it with his / her own client. 

Thereafter, there are negotiations and vetting of this draft with the client. Multiple versions of that draft are circulated between the lawyer and the client before it is ready to share with the opposite party. After such finalisation by the client, the same is shared with the opposite party.

The opposite party then vets the draft with the help of lawyers hired by them. They make their comments on the same and suggest certain changes, negotiate in certain terms that are not acceptable to them, propose a way out, and agree on a final middle ground between the parties. Such changes which are finalised are incorporated in the draft and thus, a final version is created of the contract.

Therefore, it is very normal that a cycle of contract making and drafting involves multiple versions of the draft, multiple discussions and meetings and multiple rounds of changes in the draft before it is settled for execution.

Divide the draft into clauses

A contract is a culmination of points that define a commercial relationship of the parties involved. For the ease of understanding, such points shall be divided into pointers which are known as “clauses”. There are certain standard clauses to a contract like dispute resolution clause, governing law clause, notice clause, termination clause, representation clause, consideration clause, indemnity clause etc. These clauses help to refer to a clause with ease and better understanding.

Proofread yourself and get it proof read with a fresh eye

Proofreading is one of the skills which are associated with contract drafting. It is important to develop a skill and an eye for detail. The art of finding errors and reading with a mindset to not just go through your own draft but critique your own draft is very important to learn, which only comes with experience and constant exercise. 

After a certain point, due to familiarity, the drafter himself/herself cannot find errors out of his / her own eyes. Therefore, it is also suggested to get the draft proofread once from a third party who is not actively involved in the vetting of the contract who can take it up with a fresh eye and perspective. This may seem trivial but has a major impact in catching some hidden errors and mistakes committed within the drafting of the draft of the contract.

After preparing the skeleton, polish the draft

Within the process of drafting a contract, there are certain stages which a drafter usually comes across. It is skeleton formation, further incorporation, strengthening and finalisation. In the ‘skeleton’ stage, a structure is created, usually containing the heads which shall be incorporated in the draft or the outline which a particular draft will contain. 

In the ‘further incorporation’ stage, all the factual data is inserted in the draft. This may include, the details of the parties, dates, consideration amount, scope of work and other specific details required by the draft.

In the ‘strengthening’ stage, the language is polished, usage of words is improved and the other standard clauses are incorporated. This stage helps in strengthening the structure of the contract and it nears its completion stage.

Finalisation’ stage comes after all the clauses are put in place and the draft is being proof read by the drafter himself / herself. Some minor changes are made in this stage and the draft is read as a final version. It is then ready from the drafter’s side to share it with the client for his / her comments and inputs.

Focus on accuracy and adhere to meeting notes

It must be kept in mind that the contract under construction must speak the facts only that are decided between the contracting parties. There is strictly no room for any improvisation by the drafter, unless there is something legally unacceptable or inappropriate to be written, and such modification should also be communicated to the parties for their knowledge and discussion before capturing it outrightly in the contract itself.

A contract drafting corporate lawyer is met within the initial meetings where discussions about the transaction that is contemplated between parties are undertaken. The role of such a corporate lawyer is to take meeting notes about the requirements of the parties, analyse its legality and incorporate the understanding in the form of a binding contract. Therefore, it is very important for such a lawyer to stick to those meeting notes and capture the original understanding of the parties involved. The lawyer shall abstain from twisting the same because that would make his exercise of drafting cumbersome which shall involve multiple rounds of discussion and revisions. Even if the lawyer has some suggestions and advice, he/she shall communicate the same to the client which can be further discussed with the opposite party and then incorporated accordingly.

Make it futuristic unless there is any other understanding

A contract is entered into to record the terms of governance regarding future relationship of parties to the contract. Therefore, it should never use past tense unless certain understanding is made otherwise, which can differ on a case to case basis. The language of the contract must be in present tense or future tense. For example, “parties agree to”, “parties hereby witness that”, “parties have decided to” etc. Sometimes, a contract is made operative in retrospect, i.e., from a date before the signing of the contract. Only a line is put in the start in these scenarios that “signed and executed today (date) and which comes into force from (retrospective date)”.

Ensure grammatical accuracy

A contract should be free from any grammatical errors. It is advisable to proofread for such grammatical errors before sending across the draft to the client or the opposite counsel. Grammatical errors break a good impression on the person reading the contract. It may sound far-fetched but even small a thing it may look or seem, such errors do affect the negotiations that the party goes through during the transaction.

Body of contract

A contract has various parts which are very essential to be known by the freshers before delving into the drafting stage. Firstly, we need to know and learn about the form of a contract and the parts of the same. Without understanding the body of the contract, it would be futile to directly jump into the drafting part. Therefore, below are the segments which a contract generally consists of and which should be known for mastering the art of contract drafting:

Preamble 

The preamble of a contract is the first part of the draft. It contains the contract or the title deed, commencement date, place of execution, and the name and description of the parties. It introduces to the reader, the type of the contract and the parties thereto. It also describes the character and capacity in which the parties are entering into the contract. For example, if it is a lease agreement, the preamble shall mention which party is the lessor and which party is the lessee.

The date should be mentioned both in words and numbers so as to avoid any forgery or overwriting. The same rule is applied to any figure, amount or any other numeric figure written in the body of the contract. Writing the date is significant because it has various implications and ramifications. It helps in determining various liabilities under the contract for which time is taken as an essence, application of limitation period under law of limitation, date of completion etc. which are all dependent on this date of execution. 

The place of execution is important to be mentioned in the draft in the beginning clause itself because that determines the jurisdiction to which such a contract shall apply. For any future disputes, or for that matter, for the registration of the document, jurisdiction of the sub-registrar is necessary to be determined. The appointment for registration is taken accordingly in the execution stage of the contract.

Description of parties is done according to the type of party. The parties can be a natural person or a juristic person. If a description of the natural person is to be written, then the essential details required are party’s name, father’s name, residential address, PAN number, aadhar number followed by their designation under the contract. For a juristic person the details which are required are entity’s name, entity number (corporate identification number for companies, LLP number for LLPs, partnership deed details for partnership firms, GSTIN for sole proprietorships), date of incorporation and the Act under which it is registered or authorised to execute the contract. It shall contain all the details of the authorised representative and the mode of such authorisation (board resolution for companies, letter of authorisation for LLPs, partnership deed for partnership firms). Since sole proprietorship is not a separate entity from its owner, it does not need authorization on its behalf. After such description of the parties, usually the contract is made binding on the other related persons or entities who shall be made liable in case there is any breach of the obligations.

Therefore, the art of contract drafting is essential in order to learn how to give a suitable title to the contract, put the execution date, write the place of execution of the contract and describe the parties with all the necessary identification details.

Recitals

This part contains the background of the transaction contemplated under the contract. It narrates the story behind the objective that is to be undertaken through the contract under consideration.

Testatum

This is the “witnessing” clause which refers to the introductory recitals of the agreement, if any, and also states the consideration, if any, and recites acknowledgement of its receipt. The witnessing clause usually begins with the words “Now This Deed Witnesses”. Where there are more than one observations to be put in the clause the words, “Now This Deed Witnesses as Follows” are put in the beginning and then paragraphs are numbered.

Operative part

After the testatum, the body of the contract i.e., the clauses which define the relationship of the parties for the transaction begin. It can include the following clauses depending upon the type of contract in question:

  • Definition clause;
  • Scope of work;
  • Description of property (in case of sale-purchase, lease, mortgage etc., i.e., any transaction related to property);
  • Consideration (commercials regarding the transaction can be captured under this clause);
  • Representations, warranties and covenants;
  • Exceptions and undertakings;
  • Condition precedents;
  • Defects liability clause;
  • Indemnity clause;
  • Limitation of liability clause;
  • Applicable law clause;
  • Dispute resolution mechanism;
  • Governing law;
  • Notice clause;
  • Termination clause;
  • Force Majeure clause;
  • Relationship clause;
  • Confidential information clause;
  • Damages clause;
  • Severability clause;
  • Specific performance clause;
  • Waiver clause;
  • Assignment clause;
  • Counterparts clause; and/or
  • Stamp duty clause (as and if applicable in the transaction), etc.

Testimonium part

Testimonium is the clause in the last part of the deed. Testimonium signifies that the parties to the document have signed the deed. This clause marks the closing of a deal and is an essential part of the deed.

Usually the testimonium clause is worded as mentioned hereunder:

“In witness whereof, parties hereto have hereunto set their respective hands and seals the date and year first above written”. This is the usual English form of testimonium clause. 

In India, except in the case of companies and corporations seals are not used and in those cases testimonium clause reads as under:

“In witness whereof the parties hereto have signed this day on the date above written”. Thus, testimonium clauses can be worded according to the status and delegation of executants.

Signature and attestation

The signatures of the parties are the most important part in the execution of a contract as without it nothing can be made binding on either of the parties. After signing, the same is attested by two witnesses who certify that they have seen the parties giving their signatures in a fair manner and are witness to the transaction undertaken therein.

There is no particular form of attestation but it should appear clearly that witnesses intended to sign are attesting the witnesses. General practice followed in India is that the deed is signed at the end of the document on the right side and attesting witnesses may sign on the left side. If both the parties sign in the same line then the transferor may sign on the right and the transferee on the left and witnesses may sign below the signatures.

Annexures or schedules

Annexures are added after the signing page of the contract. All the illustrative and factual information which is required to be provided under the contract is often referred to in the annexure or schedule attached at the end. This helps focus on the core legal clauses that are binding the parties to the contract. 

For example, a deed remains incomplete unless particulars as required under registration law about the land or property are given in the Schedule to be appended to the deed. It supplements information given in the parcels. A Site Plan or Map Plan showing exact location with revenue no. Mutation No., Municipal No., Survey No., Street No., Ward Sector/Village/Panchayat/Taluka/District etc.

Some essential clauses for contracts

In this segment, we shall discuss some of the most essential clauses which are to be included in almost every kind of contract. While drafting a contract, ask questions to yourself regarding the type of contract to be drafted. Try answering all those questions in your draft. This shall improve the impact of your contract because it will somehow contain all the necessary details to minimise ambiguities. Parties should not be left to guess or assume facts with respect to any aspect of the contract. Thus, the onus of the contract drafter is of high magnitude.

Some of the essential standard clauses are:

Condition precedent

Under this clause one party of the contract puts certain conditions which are required to be fulfilled or compiled with before getting the contract operated. These play an important role for executing contracts which are dependent on some prior responsibility of the other party. For example, in a sale-purchase transaction of an immovable property, the buyer can put conditions precedent to the transaction such as getting the property white washed, repairing all the appliances and other fittings etc.

Indemnity

An indemnity is a promise by one party to take financial responsibility for damages that the other party may suffer as a result of the first party’s breach of its warranties under the agreement. Where contracts include representations and warranties, an indemnification clause should also be included. Pursuant to such indemnities, each party would agree to pay any damages and costs of litigation involved from a breach of its warranties. Since both parties should be willing to bear the cost for the consequences resulting from the breach of their warranties (especially damages to third parties resulting from a breach of a party’s warranties), an indemnity clause serves as a mechanism for allocating the risk of loss from certain problems.

Representation

These are the claims which are made by a party which play an important role in inducing the other party to enter into a contract. These representations made by the inducing party carry legal consequences and can be enforced by the induced party in the event of these representations turning untrue or becoming inoperative.

Cure period

Contract is a document which consists of the promises that are not expected to be broken between the parties. However, a possibility of a breach is always contemplated in a contract in order to decide the modalities in case such an unfortunate event occurs. This is typically a defect cure period which is written in a contract. It can be understood by considering an example. Suppose, a lessee is responsible to pay for the lease of an immovable property. Now, the said lessee defaults to pay lease rent for a month and again defaulted for the next month. There can be a provision in the contract which says that if in case the lessee defaults in payment of the lease rent for three consecutive months, the lessor shall provide for a cure period of 15 days within which the lessee shall make good the default committed (i.e., paying the arrears) after the lessor issues a written notice in this regard. It can be further provided that if in case the lessee fails to make good the default within such a cure period provided by the lessor, then the lessor can be entitled to terminate the lease deed between the parties, unilaterally.

Estoppel

Estoppel means to hold someone responsible for the representation made earlier by that person. This clause helps prevent a person from back-tracking from something that he promised or claimed before. It prevents that person from making arguments against his / her earlier representations.

Termination

This clause enumerates the events and mechanisms by which the parties to the contract can terminate the contract. It mentions the conditions to terminate the contract. For example, the parties are required to give a 30 days’ prior notice to the other party expressing their intention to terminate the contract. Usually events which bring termination of a contract into picture are also enumerated for the sake of clear understanding between the parties. The more clarity of terms and conditions presented in the contract, the lesser are the chances for it to get into litigation.

Remedies

Contract law enumerates legal remedies and consequences that can be sought in the event of breach of a contract. The remedies available in law are one or a mix of those available under various laws including the specific performance of a contract, indemnity, damages, litigation, arbitration, termination, mediation, restitution, etc.

Force majeure 

This is a clause that waives the parties’ obligations to deal with an uncertain event that is beyond the apparent control of the parties. Such a clause must be worded upon with care to include the events in a wider amplitude in order to safeguard the interest of the client. In drafting force majeure clauses, parties may rely on general clauses or may specifically enumerate for the events that constitute force majeure. A prudent force majeure clause specifically enumerates the events that will prevent performance and entitle a party to suspend or excuse an obligation. Force majeure clauses may also include language that is industry specific.

For example, during the period of COVID-19, when there was a complete lockdown of any work, trade or commerce, it was difficult for the people to fulfil their contractual obligations. After such an event, contract drafters have been seen incorporating “pandemic” as an event for force majeure operability. The art of contract drafting involves how far a draftsperson can think. He must think out of the box to protect the interest of the client and to safeguard the client’s interest by thinking of situations beyond normal parlance.

Some dos and don’ts in contract drafting

Do check the punctuation properly

Punctuations make or break the meaning of a sentence. Therefore, an important document having legal consequences must be checked for punctuation properly. Punctuations have the power to change the meaning of a sentence. Therefore, it is advisable to double-check for the punctuation used in the sentences of a contract before executing the same or getting it registered.

Do check the usage of professional language

Contract is not an everyday document. It has a sanctity in the eyes of law. Therefore, it is important that it should be executed in a formal language. Industry standards have been made to recognise such professional legal language which is acceptable in the court of law. Therefore, usage of such formal legal language is necessary for a standard that is legally recognised and the art of writing in such a language is what is called the art of contract drafting. Sentences shall be framed in such a manner that they convey the essence in the initial part itself without creating any suspense for the parties. Smaller sentences shall be used in order to make people understand the essence efficiently without losing their interest in the middle of a longer sentence. If possible, a single word must be endeavoured to be used in place of a group of words. Also, sentences should be more straightforward and direct without taking a roundabout to convey something.

Do check for any accidental changes made while navigating through the draft

There are instances where the keys of your device are accidentally pressed while navigating through the draft. Such errors must be checked before final delivery of the contract or before getting the contract executed.

Do check for the structure of clauses

The chronology of clauses has to be checked to make coherence of the draft and the communication of intention for the purpose for its construction. Therefore, there is a standard chronology that is followed while drafting the contracts. Usually, the initial clauses include the core understanding of the parties like scope of work, consideration, representations, conditions precedent etc. However, towards the end, boilerplate clauses are incorporated. These are a standard set of clauses that are usually found in all the contracts. They are put towards the very end of the draft of the contract and include clauses such as governing law, dispute resolution, severability, counterpart, notice, waiver etc.

Don’t leave anything for assumption

The contractual terms shall be very specific, to the point, clear and complete in all respects. Leaving loopholes can breed assumptions, which can lead to confusion of understanding between the parties and hence, leading to disputes. The main aim of a contract draftsperson is to be so efficient with recording the terms that they leave no scope for dispute between the parties.

Don’t overuse legal terminology

A legal document contains legal terms and expressions. However, one should not overuse it. Usage of words like hereby, herewith, aforesaid, henceforth, whereof etc. must not be overused. The contract should also not be verbose. It should contain simple plain professional English language which can be easily understood by common people. Keep in mind that the contract is the recording of understanding of non-professionals; therefore, it must be for them and should not contain too many technical terms that can go beyond their comprehension. 

Why should you master the art of contract drafting

If you are someone who aspires to become a corporate lawyer or pursue a career in corporate litigation, it is important for you to know what exactly is the role of a corporate lawyer and what it takes to be a corporate lawyer since the inception. Every law school has a regular curriculum consisting of procedural laws, constitutional law and other civil and criminal laws. However, the regular curriculum inculcates corporate law as an individual subject only and does not emphasise much on its practical aspects. Also, most of the law colleges offer corporate law as the honours’ subject. This is where a person starts their journey to become a corporate lawyer by learning the laws which constitute the corporate law in India.

Drafting is one of the subjects taught in law school to students. However, it differs in leaps and bounds when compared to the practical working in a law firm or otherwise. Contract drafting, client negotiation and handling the matters are not the topics which are taught in a law school but these are definitely the skills which are honed after an advocate enters into the field of legal practice.

Every business transaction that takes place in the corporate world is governed by a legally backed contract. For this, business entities need corporate lawyers. With globalisation, the number of transactions in the business world is increasing manifolds. With each passing minute, the load of transactions is pressing an increasing demand for the corporate lawyers as well. Therefore, aspiring corporate lawyers should learn the art of contract drafting. This is not a skill which can be learned or acquired in a few days, rather, it is a process in which a lawyer excels along with the experience he gains.

Freelance contract drafting opportunities

After gaining a certain experience in the contract drafting field, either with a law firm or any other mode, corporate lawyers start getting freelance contract drafting projects. They need to identify clients, announce their readiness to take such assignments, convince them about their capability and deliver the result timely to create trust between their clients. Liasoning, advertising, spreading through word of mouth or putting it on professional sites like LinkedIn, Upwork etc. can help in amplifying their readiness to take freelancing contract drafting assignments independently. Showcasing past experiences, taking testimonies from satisfied clients and other innovative ways can be used to create trust and used as a mode to convince new clients to start their association with the contract drafting freelancer. 

Here are some examples of current contract drafting opportunities on Upwork:

Freelancing helps in reaping the benefits both in monetary terms and by clientele development. It is sometimes better to work as a freelancer than to have a fixed salary job in the long run. Hence, contract drafting is a skill that helps one set up one’s own effective corporate law practice. This is one of the main reasons where mastering the art of contract drafting makes a difference.

Law firm opportunities

The corporate teams of law firms are on a constant lookout for candidates who are interested in working in this field. Placements take place in the final year of law colleges, pre-placement offers are received by exceptional candidates during and after their internships, assessment internships are backed or direct applications can be made to the law firms for such roles. Their can be jobs for contract drafting, reviewing and vetting in various corporate related team in law firms, such as, Private Equity and Venture Capitalists team (commonly known as “PE/VC team”), General Corporate team, Corporate Restructuring team, Real Estate team, Corporate Funding team, Capital Markets team etc.

The main role of the candidates working in the corporate side of the legal field are involved in drafting of the contracts. Therefore, mastering the art of contract drafting is very necessary for students / professionals interested in the area of corporate law and for securing their job in a law firm.

In-house job opportunities

Law graduates and professionals are commonly seen to take up one of the three roles that are prevalent in the legal practising world, the ‘law firm job’, ‘in-house legal counsel role’ or ‘practising in the courts – litigation’. Amongst these three, the corporate law practising lawyers go for the first two. Apart from the discussion regarding law firm jobs and roles, it is equally important to discuss the role of the independent lawyers in the legal team of the companies. Where on one hand, an individual takes up legal work and assignments from a variety of clients in a law firm, on the other hand, an in-house legal counsel helps in taking up matters only concerning or involving the company they are working for. This is the only difference which can be seen in a law firm role and an in-house counsel role. Therefore, for securing a role as an in-house legal counsel also, an individual needs to be adapted to the skill of contract drafting.

Litigation opportunities

Under litigation, though the contract drafting does not play a major role that the contract professionals have to undertake, but, there are times when the transaction involves contract verification, vetting or perusal. In such instances, knowledge about contract drafting can help peruse the document by the litigation professional in a better manner. He can point out the shortcomings or the defects only when he possesses the knowledge about contract drafting and its basics. Therefore, it is very important for a lawyer to learn about contract drafting and the process involved in it.

Frequently Asked Questions (FAQs)

Is there any course available to sharpen the contract drafting skills?

There are various certificate courses, diplomas and other boot camps conducted by many online portals. One such renowned and reliable source is the legal ed-tech platform of Lawsikho which provides various courses and has a proven track record for helping the freshers and other professionals who want to create a niche in contract negotiation and drafting. 

The art of contract drafting is an art which shall be practised by every aspiring lawyer and practising advocate. It helps in improving one’s drafting skills and also in analysing the ramifications of the dispute or transaction with enhanced understanding. It also helps to study the relationship between the parties in a transaction or dispute in a better manner.

Is contract drafting taught in a law school?

Drafting and pleading are taught as a subject in law school. However, that is taught in a theoretical manner only and not in the form in which it is required in the practical world. That is why aspiring fresher corporate lawyers can look for courses, workshops, and certificate classes to hone their skills prior to entering the practical world so that they do not enter the field of legal practice without any sufficient knowledge.

Is there any standard law that prescribes the clauses to be added to a contract?

Contracts formed in India, i.e. contracts having Indian (natural person/juristic person) parties are governed by the Indian Contract Act, 1872. However, there is no prescribed law to determine the important clauses that are required to be included in a particular contract. Contract law has a rule of party autonomy; therefore, there is no law that mandates the regulation of the understanding of a particular contract, subject to maintenance of legality in the clauses incorporated. The inclusion of the suitable clauses is only determined after considering the terms and conditions of the agreement between the parties, what they want, how they want to govern their commercial relationship and the stringency which they want to follow. Once a lawyer gets a hands on drafting contracts, the inclusiveness of clauses in those contracts come along with the practice itself.

Are there standard drafts which are to be followed while forming a contract?

There are a lot of contract templates available online; however, laws in India do not prescribe a standard proforma or template for contract drafting. Again, it is party autonomy, and the understanding can be presented in any manner acceptable to the parties to the contract. There are a few industry practices which have now become a standard but the professionals believe that these standards are to be followed for the sake of uniformity and acceptance only.

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