Contract Drafting: Caring the Nuances

For every business, contracts form an indispensable part of a smooth run. It forms a very critical part of the business agreements and functioning. Moreover, with much advent of commercialization and larger market, the drafting of contract has become a very important task where it is this contract on which the business will work upon. The contract must be drafted in such a way that is clear enough to be easily understood by a person of ordinary prudence and at the same time detailed enough so that it cannot be willfully misinterpreted. Therefore, this requires a lot of time for drafting an extensive contract that can incorporate all the nuances of the business, to meet the object of such contract with precaution, and to minimize the legal and business risk resulting from the inconsistent language.

Drafting a Contract

Learning how to draft a contract is very important before drafting it. There are a lot of nuances that must be taken care of while drafting a contract. We have to remember, that this draft of the contract will regulate future litigation if any arises. Some of the basic things that must be taken care of like Preamble, Definitions, Subject matter of the contract, consideration of time and payment, confidentiality, the scope of work, the liabilities and risk allocation, termination of the contract, etc. There can be many such topics that primarily depend upon the nuances of the business.

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The preamble is a part that introduces the parties to the contract with the arrangement and important dates with the business and addresses of the offices of the contract with the jurisdiction of the court which will be there if any dispute arises. This preamble is the face of the contract. This distinguishes the role of the parties if there is more than one. This helps to have a distinguished relationship among the parties and their expected liabilities and their lawful status in the contract. Moving further, the contract will have the bare text and structure on which the contract is expected to be based upon. This has to contain facts and intentions to enter the contract. The reader of the same will get the notice of the facts and can easily structure the whole contract. Moreover, it will help to set the tone of the contract by providing the essential elements of the contract.

The definitions are very important for a contract. The definition of the terms used in the same will set the scope of the contract. If in case of any dispute, it is very necessary to have a structured definition of each term. In what sense and context the terms are used in the contract are necessary to ascertain. The subject matter of the contract will consist of various parts to set the agreement more adequately. This subject matter will consist of the functions that are expected from the parties. The functions will eventually contain each liabilities that can be put upon if there is any such breach of the contract. The process in which the payment has to be given and how the payment has to be structured must be made very clear, to not have any confusion. What are the implications for non-payment and even tax commitments, should be very clear.

While addressing the liabilities, it is important to structure the same in terms of risk allocation and covering the loss for any such breach by any parties. This is important because if there is any such breach of contract, the main issues lie with the indemnification of the parties at loss, hence this provision must find a priority place in the contract. What constitutes the breach of the contract must be made very clear. What services will be expected by the parties and what will be the timeline must be mentioned. Moreover, the situations in which there cannot be any liability should also be mentioned. Due to its nature, it is highly recommended that one should take the help of an attorney for drafting the contract.

IPLF

To draft a reliable and secure contract, an attorney is needed, especially in the case of complex contracts. The general objective of drafting a contract is to guarantee that each party completely comprehends the terms and conditions in the agreement. Along these lines, the individual drafting the contract should use clear and straightforward language, however much as could be expected.

The team at IP and Legal Filings (IPLF), through the support of Khurana & Khurana, have a devoted drafting team with specialization in International Sales, Commercial Agency, Confidentiality, Distributorship, Contracting, Subcontracting, Technology Transfer, Trademark Licensing and Turnkey Transaction. The team assist in analyzing client’s drafts, preparing standard templates, recognizing the variables relevant to a contract, and creating a checklist of “clauses”, that may help convey the different specifications of each agreement. Providing clients with end-to-end solutions and all necessary support promptly, to follow the legal formalities to start their business operations or conclude deals, and also makes sure that their business interests are safeguarded.

Author: Saransh Chaturvedi (an advocate) currently pursuing LLM from Rajiv Gandhi School of Intellectual Property Law (IIT Kharagpur).  In case of any queries please contact/write back to us at support@ipandlegalfilings.com.