What is Contract Drafting?
Regardless of whether you are drafting a simple sales agreement, a complex merger agreement or an employment agreement, proper drafting is the first and most important step in ensuring that your reader understands the terms of the agreement. Lawyers who have spent years honing the skills necessary to be a good communicator should not forget to apply those skills when drafting contracts. A poorly written agreement can convince no one.
In this era of detailed disclosure and strict formalities, it is easy for contract drafters, particularly those who are new to the field, to lose sight of the fact that a contract is a communication. It is easy to forget that the person with whom you are communicating is not a lawyer but rather your client, who may not have spent three years in law school and twenty years practicing. A contract is not drafted only to prevent a future fight, although it certainly accomplishes that. No, an agreement is drafted to communicate contractual terms (rights, obligations, etc . ) between two parties. It is a tool for expression. Unfortunately, it has become a tool for confusion.
Nonetheless, despite its function as a communication tool, legal drafting is distinct from general English composition and does not always follow the rules learned in high school English class. While some may argue that this is a reason to abandon all forms of "rules", it is not. Some rules are universally considered indispensable by professional legal drafters. These rules are rules of style, not rules of grammar. They are the rules which, when violated, often result in ambiguity or other errors. A poorly drafted document, while grammatically correct, will still miscommunicate. Legal drafters need to study and understand these commonly accepted rules of legal drafting style in order to improve the accuracy and precision of documents. This understanding will also help to reduce the number of misinterpretations of those documents.
Key Components of a Style Guide
Language consistency: Every style guide must include a way to control language consistency. Define any acceptable variations in your chosen contract terminology and let your contract drafters know how to deal with any inconsistencies they come across in sourcing contracts (e.g., singular and plural forms, different verbs for the same action, etc.). But do not get bogged down on minor issues. A misused term in a contract will not disqualify your work from being considered succinct and clear, in fact, it will likely simply slip by unnoticed.
Formatting standards: You should establish standards for fonts, font sizes, spacing, margins and other formatting concerns, and be sure to provide instructions on how to use numbering, section titles, headers, footers, tables, lists, and other elements. You will also want to specify approved paragraph styles for items like waiver, miscellaneous provisions, governing law, licenses, arbitration and entire agreement.
Terminology usage: One of the most challenging aspects of drafting is the internal language used by your company or client. Each business or industry has multiple terms that are used as a shorthand for concepts — for example, "DMO" might refer to direct market offerings or designated market outreach, or both. If you leave this to the discretion of the drafter, there is no telling how convoluted the document will read — particularly if multiple drafters and editors are involved. Thus, defining these elements is crucial to writing clearly and concisely. Be certain to include a glossary of terms, abbreviations and acronyms.
Use of Language and Tone in Contracts
Contract language typically tends to be a formal style of communication, one that should generally be followed. Not only does this increase the chances that the contract will stand up in court, it also helps to avoid misunderstandings in the future that could lead to the necessity for litigation. Your contract should be written in a way that is clear and direct without unnecessary filler text. It is very important that the language be very clear and follow a formal writing style so that there is no ambiguity or otherwise misinterpretation of the contract terms.
Ambiguity in a contract may result in the courts construing or interpreting the contract against the party or person who drafted the agreement. Therefore, when drafting contracts, if any terms are unclear, or if you are not sure what the single most accurate way to write something is, consult with a lawyer or remove the ambiguity altogether.
Formatting and Organizing Your Contract
Once you have drafted the contract, you should still give some thought to logical arrangement. Except for the three major sections—Recitals (Preamble), Definitions, and Terms—the order of sections and clauses should not matter legally. A clause like 5.02 (Obligations Relating to Sales, Transfers, and Assignments) must be grouped with other clauses about obligations for the same kind of event—usually those ending in "Unspecified Events," in order to facilitate future review by lawyers and to ease perception of the information by prospective clients. For example, Clause 5.01 (Obligations Relating to Administrative Actions) and 8.02 (Obligations Relating to the Services) are grouped together with Clause 5.02, which is in turn grouped with clauses that end similarly—5.03, 5.04, and so on. The groupings of these clauses makes them easier—and faster—to properly locate and cite. Also, if there are no clause numbers and the sections do not have to be cross-referenced directly, then you should use section numbers—1., 2., 3., and so on—instead of clause numbers, to help structure the logical arrangement of the contract. For example, 5.12 is a subsection to 5.01, but it is not appropriate to use it until Clause 5.01 is numbered 5.01 and placed in the order, so it does not include the reference to Clause 5.01. You can work in section numbers before the individual clauses are completely identified, and then you can go back and insert the appropriate clause numbers, without reordering any of the clauses that are already in the ideal sequence.
Common Mistakes and Issues in Contract Drafting
Even the most seasoned lawyers make common mistakes while drafting contracts. These errors include: Lacking internal consistency. Could you build an airplane with parts that were a little bitiler? Acknowledge or define the terms of the agreement, then be consistent in your use of those terms. Failing to look at the big picture. In the rush to finish the draft and move on with the deal, it is all too easy to neglect reviewing the document from a big picture viewpoint. A fashion designer can produce a collection of beautiful garments but that doesn’t mean they look good hanging together. Shortchanging the introduction. The introduction should not be a perfunctory paragraph for the sake of form over substance. Like a newspaper needs a headline and a byline, a contract needs a purpose statement and a statement of who the parties are. Those are the first things the reader sees and is the first impression the reader will form about the document. Using inactive voice . The majority of a contract should be in active voice (this applies to other types of writing too, not just contracts). Using the phrase "In the event Contractor fails to perform" is a passive voice sentence. That’s a mouthful. Instead say "If Contractor fails to perform." Not dotting your i’s and crossing your t’s. Or making a misstep that could lead to ambiguity. If one of the parties is a corporate entity, it should be identified as such at the outset, preferably using the full legal name. When applicable, the party should refer to itself as "Seller" or "Buyers", not as "Party A" or "Party B", within the document. Missing the forest for the trees. The big picture is important but so is the minutiae. Failure to include relevant details in order to present the big picture can have unintended consequences.
Contract drafting style guides are valuable tools to help you avoid common mistakes. When your styles are applied consistently through the course of a contract – that is when the document becomes more than a bunch of words strung together.
Role of Technology in Contract Drafting Today
Modern drafting has been aided significantly by the tools available to us. There are an ever-growing number of cloud-based programs that can help you organize the entire drafting process. If you are working with a team, there are a number of collaborative drafting platforms available. Many legal publishing and drafting software companies have also developed style and checklists to assist with your drafting requirements. Some companies, like Xact Diligence, focus on drafting specific documents, such as NDAs or MSAs. Others, like Practical Law, offer checklists and general drafting tips for various drafting situations.
Various jurisprudential programs can be used to assist with drafting. Westlaw has integrated its form drafting capability, Practical Law, into its Practice Tools setting. The Practical Law side of Westlaw also includes a checklist of key drafting and negotiation considerations for NDAs. Lexis Nexis also offers several resources related to drafting forms. Their Westlaw competitor is Drafting Assistant. Lexis also offers practice guide checklists for various topics.
If you don’t have access to online forms databases, the Form Book of the American Bar Association, the Federal Rules of Civil Procedure Annotated, as well as, state and local bar association guides offer forms and lists of drafting and negotiation considerations.
Nevertheless, when drafting contracts, you should have a good grasp of the general considerations for the document. Every practitioner should read the ABA Guide to Drafting Contracts. Also consider How to Draft Legal Documents, by Robert A. Feldman, which combines the two chief contracting treatises (Feldman) into one. The language and grammar of contracts are also governed by the legal writing handbooks of Bryan A. Garner and Antonin Scalia. The Handbook of Legal Drafting by Bryan A. Garner can teach you lots of in-depth details about the mechanics of good legal writing. Beyond the highly technical legal writing guides and treatises, any and all plain English guides to drafting are good references. Due to their cross-practice use, I recommend visiting Plain English for Lawyers, by Richard C. Wydick, and A Manual of Style for Contract Drafting, by Kenneth A. Adams.
Regardless of your level of experience with contract drafting, technology can help you maintain the drafting style, improve the quality of the contracts you are working on, and enable you to focus on the substantive issues of a deal.
Styling Guides in Other Jurisdictions
When it comes to contract style, there is no one-size-fits-all solution. This is particularly true when it comes to looking at the practices and style of other jurisdictions. It’s always best to adapt an existing style guide to suit a new jurisdiction or to create a new one from scratch if necessary.
There are two aspects to the adaptation process: 1) identifying and understanding the key elements of the style, and 2) determining which of those elements are essential for your jurisdiction.
If you are adapting or creating a style guide for your local jurisdiction or the jurisdiction in which you are currently practicing (or planning to practice), only a few key elements of that style are likely to be critical. At best, only a few elements of that style will actually have some force in your local court system or lien discipline. If the style was from your soon-to-be local jurisdiction, you may even want to avoid all of them.
It is different if you are adapting or creating a style guide for a jurisdiction you are not familiar with, or for which you are only doing drafting or reviewing on an occasional basis. In this case, the entire rules of style may be absolutely essential (if you want to get the contract signed any time in the near future).
Many style guides tell you when a particular element of style is required (such as the placement of clauses and sections) in order to comply with the form contract rules of a particular court. However, even if your local jurisdiction has no form contract rules or no contract rules, it is generally a good idea to follow the style of the contracts the finder of fact is noticing in other cases. So by adapting another jurisdiction’s local style guide to your jurisdiction, you are ensuring that you are working from a proven springboard of sound principles.
Also consider that depending upon the widely recognized conventions of the drafting style you are considering, simply copying and pasting might be a better solution than trying to adapt the guide to your local requirements. Indeed, depending upon the sheer number of required edits, it may be better to throw out the original guide and start from scratch than to attempt to adapt it. There is nothing wrong with adapting and synthesizing a new style guide from elements of older guides, or just starting over from scratch.
In the end, you will be the best judge of which interpretation of a foreign jurisdiction’s contract style guide is the best fit for your local jurisdiction. But trusting your instincts on this is no substitute for an active reading of your local rules and your local court system’s preferences.
Wrapping Up – Best Practices
Throughout this blog post, we have provided guidelines and examples to help you establish a consistent and accurate framework for drafting and interpreting contracts. As you adopt these practices, there are a few additional guidelines to keep in mind when creating a contract drafting style guide: The most important benefit of creating and following a contract drafting style guide is that it provides consistency to the drafting of each contract or document. For example, when drafting a series of investment management documents, this consistency can help provide shareholders with a clear understanding of their rights and obligations under each document and how each document fits into the overall objectives of the investment management relationship. When providing the terms of the parties’ agreement in contexts where the reader might misinterpret those terms, it is often helpful to refer to the contract itself and specifically direct the reader back to the contract or ask them to "see" or "review" a particular section, page or provision. For example, if you need to state whether a certain party (for example, a consultant) to an agreement is an independent contractor, it may be better to refer to the specific provision defining that party in the contract itself (e.g., "Pursuant to Section 2.3 of the Agreement, Consultant is an independent contractor") rather than to devote an entire sentence to the definition itself. In addition , a draft should clearly indicate whether an error made in a single location is intended to be repeated elsewhere in the document or whether the location is the only instance in which the words or phrases should be used. For example, if you intend for a particular person to be referred to in every sentence in a document as a "Consultant" and "consultant" means something else in a contract or is not a defined term, it may be better to capitalize the term in every instance rather than refer to that person as a "consultant" in one place and "Consultant" in another place, as the latter may cause confusion. Finally, some best practices for ensuring a reliable and effective contract drafting style guide include: Over time, as you and the rest of the Legal Department work on various drafting projects, you will likely notice other conventions and approaches that could be added to the style guide. If you certainly know that a particular approach or convention is superior to the one stated in the style guide, then you should consider replacing what is in the style guide and follow the superior approach or convention whenever you draft in the future. Ideally, the drafting guidelines will develop over time into a comprehensive and consistent explanation of your drafting preferences that will help all of us draft quickly, efficiently and, most importantly, accurately.