Avoid Common Contract Pitfalls

Your contract may seem crystal clear on the day you sign it. Yet, months or years later, an issue arises, and some crafty lawyer enters herself in the equation. Then the contract is as clear as mud, and you are facing large legal fees.

When drafting a contract, you must believe that others will inevitably make assumptions, skim over the terms, and possibly fail to meet the expectations of the other party. The goal is to ensure that all parties understand the expectations involved. Effective expectation management is based on effective communication. The law requires contract drafters to fully explore potential challenges and write efficient contracts.

Contra proferentem is Latin for “against the offeror” or “interpretation against the draftsman.” The doctrine of contract interpretation provides that, where a contract is ambiguous, the meaning should be construed against the party who wrote the language. The principle is to encourage the drafter to be clear, explicit, and consider as many potential, foreseeable conflicts as possible.

Yet, to avoid the pitfall, you must first be able to see it. A savvy attorney can help you navigate negotiations to communicate with the other parties and translate the deal into writing. Beyond the simple elements of a contract, consider:

  • Are the goods or services properly defined? (See our previous post regarding the meaning of chicken.)
  • Are terms of art properly defined and used consistently?
  • Is the consideration explained clearly? What does each party plan to receive? And when? How much payment is required? Who bears ancillary costs? Can the price change?
  • What is the scope of the contract? Are you expecting any additional actions beyond the tasks stated? Are certain tasks required to complete the service contracted? Should those be listed?
  • When does the risk of loss transfer for goods?
  • When is performance excused?
  • Have there been any recent changes to the law?
  • Would a judge or jury be able to understand it?

 

Is your head spinning yet? Let an attorney help you think through the issues relevant to your specific contract needs. Talk through potential conflicts with the other party on the front end. Contact us today at 864.804.6330.