Contract Drafting Ilpd

CONTRACT DRAFTING
Lecturer NDATABAYE Rwamo

Innocent
Lecturer of Laws
Member of Rwanda Bar Association
COURSE AIM AND GOALS
AIM
To introduce participants to the principles of contract drafting,
and in particular to the practical world of international contracts
in English.
GOALS
Provide a theoretical overview of legal and linguistic approaches
to contract drafting.
Enable participants to implement theory in context of practical
exercises involving realistic situations, including examples of real
contracts colored for confidentiality.
INTRODUCTION
A well drafted contract is elegant. Its language
is clear and unambiguous, and its organization
cohesive and thoughtful. But drafting a
contract requires more than good writing and
organization skills. A drafter should have keen
analytical skills, a superior ability to negotiate,
a sophisticated understanding of business,
the business deal and the clients business, a
comprehensive knowledge of law, and a
discerning eye.
What does a contract do?
A contract establishes the terms of the parties
relationship. It contains rules that will govern
their transaction.
This rule includes:
- the statements of facts that each party made
that induced the other to inter the transaction;
Each parties promises as to its future
performance,
Each parties rights,
The events that must occur before each party is
obliged to perform,
What does a contract do?
Each partys discretionary authority,
How the contract will end, including the
events that constitute breach and the
remedies for breach, and
the general policies that govern the parties
relationship.
GLOSSARY OF CONTRACT TERMS
Here are a few terms that you might encounter in
the course of the discussion, along with some
other terms that might be of use. Please
remember, these are not technical definitions.
Strictly technical definitions would require us to
spend more time on the details of various legal
systems than is useful for our purposes. Rather,
these are general descriptions of the sense of the
various terms.
ADR this is short for alternative dispute resolution, or
ways to resolve disputes outside of the courtroom. The
term typically encompasses negotiation, mediation and
arbitration.
Assignment - the transfer of rights or duties by the assignor
to the assignee. This may occur only by agreement or by
operation of law, for example, when someone dies or when
a company is bankrupt.
Battle of the Forms a common business situation where
business parties establish their relationship by sending
standardized forms to each other. Often, the terms of the
forms do not agree, and it can be difficult to tell if the
parties have concluded a contract, and if so, what the terms
of that contract are.
Boilerplate
The clauses, generally appearing at the end of a contract, which
are used to settle general matters such as choice of law, notice
procedures, amendment procedures, interpretation issues, dispute
resolution mechanisms and the like. The term also has a more general
definition meaning any standardized or preprinted form for
agreements. The term is also used to talking about the 'small print
Choice of Law
Often, the parties to a contract will specify which rules of law should
be used to resolve any dispute between them. Particularly in
international transactions, the choice of law can be a significant point
of negotiation among lawyers. Choice of law (what legal principles will
be used to resolve the dispute) should be distinguished from choice of
forum (where the dispute should be resolved) and choice of dispute
resolution method (litigation or some form of ADR).
Condition Precedent an event that must happen before a
contract or a contractual obligation goes into effect.
Condition Subsequent - a happening which terminates the
duty of a party to perform or do his/her part.
Consideration a common law concept which requires (in
essence) that a promise be part of an exchange to be
enforceable as a contract.
Contracts of Adhesion standardized contracts, usually
presented on a take it-or-leave-it basis, to parties of
unequal bargaining strength.
Covenant this term used in a contract means a promise
which, if not carried out, will carry legal consequences.
Often, covenants are divided into Affirmative. Covenants
(the things the promisor agrees to do) and Negative
Covenants (the things the promisor agrees not to do).
Equity this term, which is often used to mean fairness, also has a
more technical legal meaning. It used to be that the Common Law
system was rather rigid, and in order to obtain relief, a litigant had
to fit into a limited class of situations. Sometimes, this rigidity
produced results that seemed very unfair.
Eventually, a second type of court was created to hear those cases -

- those where there was no remedy at law but equity
demanded a remedy. In most jurisdictions, the separate court
systems, consisting of Courts of Equity have been abolished, but
in many areas the distinction between cases sounding in law and
those sounding in equity persist. In other contexts, equity refers
to the amount by which a propertys value exceeds the debt (or
Liens) against it. The legal concept of equity in this sense is not
known to the civil law (Romano-Germanic ) system, and can cause
problems.
Estoppel an equitable concept that prevents a party from
raising an argument when the party has acted unfairly,
fraudulently, or otherwise inappropriately. (EU equivalent:
legitimate expectations).
Events of Default When a Default remains uncured under
any applicable. Notice or Cure Period, contracts typically
provide that an Event of Default has occurred. Once an
Event of Default has occurred, the obligee may generally
pursue Remedies.
Excuse - something that forgives performance and bars
enforcement of the contract. If performance of a
contractual obligation is excused, this relieves the
nonperforming party of liability.
Execution
(1) signing; the parties execute the contract by signing it;
(2) performance; the parties may execute a contract by carrying out their
obligations and duties;
(3) enforcement of a judgment, order or writ (execution of judgment);
(4) in criminal law, carrying out a death sentence. This word is a good example of
polysemy words with multiple meanings in legal language.
Force Majeure an act of God which prevents one party from performing the
obligations owing under a contract. Commonly such things as war, riots,
earthquakes, floods, strikes and the like are included. The common law generally
takes a stricter approach to force majeure than civil law legal systems.
Impracticability A legal doctrine closely related to Force Majeure. If some
unanticipated event makes performance of the contract unusually burdensome,
some legal systems will allow a party to be excused from the contract under the
doctrine of impracticability. Different legal systems have varied requirements for
invoking this
doctrine.
Indemnity an agreement in which one party agrees
to reimburse another party if it is held liable. An
indemnity is in the nature of a guaranty, but typically is
used when the party offering indemnity has some
interest in, involvement with, or control over the
events leading to liability. Indemnity clauses are often
found in commercial contracts, and may be coupled
with hold harmless provisions. In a hold harmless
provision, the first party says that they will not hold the
second party responsible for certain actions, even if the
first party might otherwise have the right to do so
under applicable law.
Joint Venture a very broad term used in many
different contexts. In its general sense, it means
more than one person getting together for the
purpose of making a profit in a speculative
enterprise. In this regard, it is very similar to a
Partnership, but it tends to be used for limited
undertakings. Often, particularly in reference to
central and eastern Europe, American lawyers
use the term to refer to profitable activities done
in cooperation with foreign governments or
foreign nationals.
Letter of Credit a financing device whereby a bank, at
the request of a customer, agrees to pay a beneficiary
upon satisfaction of certain conditions. Typically, the
conditions are limited to presentation of specified
documents. The bank makes the agreement as a
service to its customer, and will seek reimbursement
from its customer if it is required to make payment
under the terms of the Letter of
Credit. Letters of Credit are often divided
intoDocumentary Letters of Credit, which are often
used as a normal means of payment in international
trade, and Stand-By Letters of Credit which are more
in the nature of a bank guarantee.
License this term has many meanings, depending on
the context. Its general sense is permission to use the
property of the licensor. It is often used in the context
of Intellectual Property to mean the agreement by
which the owner of the Intellectual Property gives
someone else permission to use it, typically for a
royalty or a fee. License agreements are often used to
transfer technology from one party to another. Absent
the License, the licensees use of the Intellectual
Property would be against the law. The term is also
used in completely different contexts.
For instance, a movie theatre ticket is often
characterized legally as a License.
Lien a creditor has a Lien on a piece of property
owned by a debtor when the creditor has a
contingent claim to that property.
Sometimes, the debtor voluntarily gives the
creditor a Lien as a form of security for payment;
other times the creditor receives the Lien by
operation of law. Usually non-payment of the
debt, or an Event of Default under any contract
creating the debt, allows the creditor to Foreclose
on the Lien.
Liquidated Damages when parties to a contract settle in advance
the amount of damages which will be available should one party fail
to perform. Liquidated damage clauses are generally subject to
close scrutiny under U.S. and U.K. law. This is also sometimes called
a Penalty clause.
Partnership (including General Partnership and Limited
Partnership) a voluntary (unincorporated) association of two or
more persons for the purpose of making a profit. In a general
partnership, all of the partners are personally liable for the debts of
the partnership, and have a management role. In a limited
partnership, general partners exist alongside limited partners.
General partners are personally liable and have a management role;
limited partners are not personally liable and do not have a
management role. Partnership as a concept is not known or
recognized in all legal systems.
Cure Periods often, when a Default occurs under a contract, the
obligor may have a certain period of time to cure the Default before
the obligee is allowed to exercise Remedies. Sometimes the obligee
is required to give notice before the time begins to run (in which
case lawyers will speak of Notice and Cure Periods). Notice and
Cure Periods are sometimes more casually referred to as grace
periods.
Default the circumstances where an obligor under a contract is
considered to be in breach of the contract. In formal written
contracts, Defaults often include failure of a Representation or
Warranty to be true when made, failure to perform any Affirmative
or Negative Covenant, insolvency or bankruptcy, as well as other
enumerated situations tailored to the specific circumstances.
Recitals in a formal written contract, the clauses that explain who
the parties are, and their purposes for entering into the contract
(i.e., background). Sometimes called Preamble.
Remedies the actions that can be taken upon an Event of Default.
Sometimes an aggrieved party can take action on its own. This is
often referred to as self-help. Other times, the term remedies is
used to describe the court procedures and decisions that are
available to help an aggrieved party. (See Cure).
Representations and Warranties statements made by a party in a
contract which, if untrue, carry legal consequences. Sometimes
representations and warranties need not be explicitly stated by the
parties, but instead are implied by law.
Rescission - cancellation of a contract by mutual agreement of the
parties prior to its performance.
Risk of Loss who bears the risk if the goods covered
by a contract are damaged or destroyed. Risk of loss is
particularly important when goods are being
transported long distances between the seller and the
buyer. If the seller bears risk of loss during carriage,
and the goods are destroyed in transit, the seller has a
responsibility to provide substitute goods. If the buyer
bears risk of loss, the buyer generally must pay for the
goods, even though they never arrive. Often parties
cover the risk of loss with insurance, so the ultimate
loss may rest with an insurance company. In practice,
areas of risk are dealt with by INCOTERMS and
insurance (or re-insurance).
Secured Transaction a voluntary transaction in which
a debtor gives a creditor a Lien on its property to
secure payment or performance of an obligation.
Security this particularly confusing term is used in at
least two very different contexts. First, it is used to
refer to property that is subject to a Lien. The property
is security for the debt secured by the Lien. A more
precise term for this concept would be collateral.
Security is also used in the context of investment
securities such as stocks, bonds, and other evidences
of ownership or indebtedness which are regularly
traded.
Severability - the characteristic of a contract that allows for
removal of duties or portions that are incorrectly or illegally
drawn up. The parties may agree that incorrect,
impractical, or illegal portions be severed from the
agreement and replaced by language that best reflects the
intent of the parties and comes closest to the business
objective of those severed portions. Severance allows the
remainder of the contract to be valid and enforceable.
Specific Performance a court orders specific performance
when it requires a party to carry out its obligation, rather
than merely paying damages. Specific performance is an
extraordinary remedy, that is to say not usually available,
under American or U.K. contract law. It is a good example of
an equitable remedy (see Equity ).
Tender - is a bid or formal offer. A proposal of terms is
extended generally ('put out for tender' or 'competitive
bidding'), inviting prospective parties to respond by making
a bid or tender. Do not confuse with legal tender, which is
money.
Unconscionability a U.S. concept which has its roots in
Equity, and which allows a court to refuse to enforce a
contract or a portion of a contract which it considers to be
particularly unfair.
Void - is absolutely null, empty, having no legal force, and
incapable of being ratified. In contracts it refers to an
attempt at formation of contract which is equivalent to no
contract at all.
Voidable is capable of being voided, or later
annulled. If a contract is formed but voidable,
it may either be ratified (US) or confirmed
(UK) by conduct or else it may be voided by
one of the parties. Once ratified, the promise
is enforceable. If it is voided, it is
unenforceable.
PROCESS OF CONTRACT PROCESS
A. Introduction
While a course on contract drafting may seem
dry and technical, there are a number of
strongly held ideological values underlying
contract law and its rules are motivated by
conscious and deliberate public policy. These
policies must be understood.
Freedom of Contract
The power to enter contracts and to formulate the
terms of contractual relationships can be regarded as
an integral part of personal liberty. For instance, this
respect for the exercise of personal liberty is the
policy reason underlying the rule in contracts that
one may not be bound to a contract absent that
persons assent. See conditions of validity of a
contract & effects of contracts on parties)
Exception to the freedom of contract: rules and
regulations protecting weaker parties ( see
unbalanced clauses in a contract: clauses abusives)
Morality of Promise& Accountability
for Conduct and Reliance
- There is also a longstanding moral dimension
of contract in law: that there is an ethical as
well as legal obligation to keep ones promises.
Thus, contracts should be honoured not only
because reliability is necessary to foster
economic interaction, but simply because it is
morally wrong to break them.
- Article 64 law of contract( Pacta sunt
servanda)
- See Estoppel see infra.
- Fairness
B. Preliminaries in drafting
contracts
When a lawyer is drafting a contract for his client, a key role
of the lawyer is to record in unambiguous language the
intention(s) of the parties to the contract.
Before the parties lawyers begin to draft the terms of the
contract, it is vital that the lawyers of both parties and the
parties themselves are clear as to what the intentions of
the parties to the contract are.
Parties can agree on the basic principles of agreement
verbally or they may choose to set out the fundamental
principles of their agreement, such as the subject of the
contract, the price, when money is to be paid and any
other important conditions in a Term Sheet or a
Memorandum of Understanding (MOU).
In any agreement, the lawyers job is to identify
the risk to his client and to protect his clients
best interests, always remembering that things
can go wrong.
The basic presumption should be that what can
go wrong. It is necessary to ensure that there is:
Clarity of the text of the contract and
To foresee possible litigation that might arise
from the contract itself.
A lawyer often needs to ask further questions before he
can draft a contact even when two parties think that they
have agreed the outline terms of the contract.
He/she may also add other necessary parts of the contract
like: the court with jurisdiction, applicable law, All contracts
should state the jurisdiction that the parties intend the
contract to be governed by -usually this will be at the end
of the contract in a governing law clause.
A governing law clause enables the parties to specify the
system of law which will apply to the interpretation of an
agreement and this will be particularly relevant if a dispute
arises.
C. General Writing Principles
Applicable to Contract Drafting
Contract Drafting Process
Before writing, make sure you are clear about what parts
the contract must include and what situations the contract
must cover.
Know what the parties in fact want.
Precisely because this is an obvious point, it is often
ignored.
Try outlining the contract to make sure that all the needed
pieces are included and are organized logically.
The following guidelines may be helpful to you in beginning
The following guidelines may be
helpful to you in beginning to draft a
contract:
- Reconcile yourself to writing many drafts of the
contract to get it right. If you try to get all the
details right in the first draft, you are likely to
miss some important larger points
- Use clear, simple, businesslike language. Use only
the technical terms you need and define them if
necessary.
- Make each clause do one thing, not more.
Outlines can help you here by breaking down the
whole contract into a series of small points.
- Check to make sure that you have used only
one term for one item or person. Referring to
the same person, item or concept by two
different terms creates an ambiguity that
invites misunderstandings later.
- If needed, include a definition section to
define all your key terms, so that the reader
understands any unusual terms.
- Check also to be sure that you have not used
one term for several different items or persons.
This can create unwanted ambiguities.
After polishing each clause in the contract, revisit
the document as a whole, looking for larger
contradictions between parts of the contract,
rather than wording problems within one clause.
In your concern for the details, you may have
overlooked some larger ambiguities.
Somewhere along the way, consult others. No
one person can imagine all the pitfalls that the
parties to any contract are hoping to avoid.
No one person can imagine all the ways some
reader can misconstrue a point.
d. Guidelines for Revising Drafts of
Contracts: Accuracy
when checking, you have to consider the following:
Is the content accurately stated?
Could any points be misunderstood because of
ambiguity?
Are irrelevant facts or other irrelevant
information excluded?
Are terms of art used correctly?
Are key terms used correctly?
Are paraphrases accurate?
Are names of parties and their status correct?
Are the citations accurate?
ORGANIZATION
-Are paragraphs internally logical?
Are there clear and precise transitions
between paragraphs and sentences?
E. READABILITY:
Are subjects and verbs close together? Are
unnecessary modifiers eliminated?
Are sentences not overly long?
Are lists clearly structured?
Are unnecessary prepositional phrases
eliminated?
Is the text generally concise?
STYLE:
Is style consistent?
Is the tone and level of formality appropriate
and consistent?
Try to give each of these categories your full
attention for the specific amount of time you
have parcelled for the task. After you have
finished revising, you can move on to
polishing the draft.
OTHER POINTS
General:
No archaic terms (e.g., hereinafter, hereby)
No legal pairs (e.g. good and sufficient)
No Latin or foreign expressions (e.g., bona
fide, PACTA SUNT SERVVANDA)
Plain English, not legalese(Jargon).
Use the right verb
English has many ways to describe obligation,
rights, prohibition and permission, freedom to
choose and limits on that freedom
CHOOSING WORDS
A good drafter should consider what he/she
wants to say and how he/she can best say it.
Before using any word it is recommended to
make sure that the word to be used is the right
word that gives the ideas you want to express.
Some words or expressions are difficult to
understand the meaning. A good drafter needs
to use words/expressions that are easier to
understand. The list below shows some of the
words/ expressions which are more preferred
than others. See the example of list of good
words to be used in contract drafting( See from
the Slide 125
Style and presentation
It may seem that style and presentation of a contract is not
particularly important - however, as legal systems develop
it is common to find increasing consistency as to both the
style and presentation of a type of contract; this helps not
only the Courts but also the practitioners themselves.
Consistency of style and presentation makes the job of a

lawyer easier, because he does not have to begin afresh
each time he drafts a contract and will find it simpler and
quicker to review contracts drafted by others
It is that lawyers hold/use precedents (templates) for the

types of document that they typically have to draft - this
saves time for the lawyers themselves and money for the
clients.
F Drafting and translation
When drafting a contract, it must be very clear

to all the parties which language is the
language which governs the contract (i.e. it
should be stated in the contract itself which
language version of the contract is the
definitive version of the contract in the event
of a conflict). Translations of a contract should
state that these are provided for information
purposes only and should not be relied upon
to interpret the contract itself.
Drafting and translation
For example, if a contract were to be
translated into Kinyarwanda, French and
English so that all relevant persons could read
and understand its terms, it would still be
necessary to include a clause in the contract
stating which of the texts is the definitive
version of the contract. Without such a clause,
disputes can arise due to differences in
language or translation that can be difficult to
settle.
G. Use of Active voice
A serious problem in legal documents is misuse of
passive verbs. Documents are more readable in English
if the passive is avoided. Passive verbs hide
responsibility and make sentences longer than needed.
Two or three time a page is enough.
The use of passive voice makes sentences unclear.
Eg: The Premises shall be kept in good repair. Is this
the obligation of the tenant or that of the landlord?
Active verbs become natural for writers who ask the
important question WHO does
WHAT to WHOM? (in grammar: SUBJECT + VERB +
OBJECT).
Use of Active voice
To make it clearer it can for example be:
1. The tenant must keep the premises in good
repair. Or
2. The Landlord must keep the premises in
good repair.
The passive voice couples a form of the infinitive to
be with a past participle, which is another verb that
usually ends with
Was completed and is constructed
Shall be complied with/must comply
When the employee is returned to duty, leave
balances are reconstructed and any leave forfeited
is restored.
When the company returns the employee to duty it
reconstructs leave balances and restores any
forfeited leave.
Examples
In response to comments that were received,
it has been determined by the department
that proposal A will be deleted and a new part
will be added.
Becomes: In response to comments, the
department will delete proposed A and add a
new part.
Use of Active voice
the apartment shall be occupied by no person other
than the tenant, his spouse, children, and temporary
guests, without the written consent of the landlord.
No person other than the tenant, his spouse, children,

and temporary guests shall occupy the apartment
without the written consent of the landlord.
The tenant shall not permit a person other than the

tenant, or the spouse, child, or temporary guest of the
tenant, to occupy the apartment without the written
consent of the landlord
OVERVIEW OF CONTRACT
STANDARD PARTIES
Overview of Contract Standard
parties)
Most written agreements have the same basic structure:
Title
Preamble /Recitals
Definitions
Convenant
Statement of Consideration
conditions and Warranties
Indemnification
Breach and Cure
Termination
Remedies
Additional Important Contract
Provisions
Assignment/Third party
Choice of Law
Amendment and Waiver
Arbitration
Integration and Severability
Notice
Authority to Sign
Title
The title usually identifies the type of agreement,

such as Sales Agreement or Lease , Labour
contract.
In those few circumstances when the nature of
the parties arrangement is both unclear from the
language used and yet important to determining
their rights, the label the parties attach to their
relationship may signify their intent but is unlikely to
be determinative and may not even be relevant.
Instead, the economic realities of their transaction
often govern what type of agreement the parties
have formed
Examples of some contract titles
Sale contract
AGREEMENT OF PURCHASE AND SALE
MERGER AGREEMENT
SHARE EXCHANGE AGREEMENT rather than
SHARE EXCHANGE AGREEMENT AND PLAN
OF EXCHANGE o
Preamble/recitals/ background
Most transaction agreements begin with some
form of a preamble that identifies the purpose of
the document and describes the transaction, the
intent of the parties and any assumed facts
underlying the transaction.
The preamble identifies the parties and the date
of the transaction as well as the nature of the
transaction. In many contracts, this appear as the
whereas section, in which all of the statements
begin with that term.
Recitals have no legal relevance. They are not
enforceable provisions. They do not provide rights or
detail remedies. A mere recital that consideration
exists or has been provided will not prevent either
party from proving that consideration is in fact lacking.
However, recitals may be useful in later
interpretation. They assist a reader of the contract to
understand the nature, purpose, and basis for the
agreement.
Facts stated as recitals may also be relevant to whether
there is material breach, since the recital will establish
what is important to the parties.
Examples
Whereas, Buyer and Seller entered into a
contract dated March 15, 2017 in which Seller
Promised to deliver 100 bicycles to Buyer for
10,000,000Frws.;
Whereas 40 of the bicycles were defected, and
whereas, Buyer and Seller desire to inter into
an accord to solve the dispute between them;
The parties agree as follows:
Examples( Background)
1. on March 15, 2017, Seller promised to
deliver 100 bicycles to Buyer.
2. Buyer alleges that 40 of the bicycles were
defected.
3. Buyer and Seller desire to enter into an
accord to resolve the dispute between them.
4. the Parties agree as follows:
Examples( Preamble )
Supply Agreement, dated as of March 15, 2017, between
Carpet-makers, Inc, an Rwandan Corporation( The
Manufacturer), and Big Retail Corp, a Burundian
corporation( the Retailer). OR
This Supply Agreement, dated as of March 15, 2017, between
Carpet-makers, Inc, an Rwandan Corporation( The
Manufacturer), and Big Retail Corp, a Burundian
corporation( the Retailer)
Or
Name of Agreement: Supply agreement
Dated: As of March 15, 2017
Parties: Manufacturer:..
Retailer: .
Definitions
Brief written agreements may not need
definitions. However, if a written agreement
refers to the same concept many times, it may be
useful to create a short term as a substitute for
the concept, particularly if the concept itself
takes many words to express.
The use of defined terms can simplify a document
immeasurably. While the number and extent of
the definition section depend upon the nature of
the agreement, virtually all contracts will include
some defined terms.
Example: Definition
In this agreement, the word structure shall
mean an office building of no less than 20
floors
In this agreement, the word structure
means an office building of no less than 20
floors
In legislative drafting they also use this form:
For the purpose of this Law, the following
terms mean:
1.
Statement of Consideration
For those instances when consideration is required, it should be
reflected in the contract. Those contracts include such a statement
usually near the beginning of the agreement.
It should not be submerged in legalistic, archaic language (Now,
therefore, the parties and with all due premises considered and in
mutual considerations of mutual covenants,
and agreements hereinafter set forth in consideration.).
It should not, however, be so simple as to be meaningless (The
Parties agree.). It should be simple, but include the notions of
agreement and bargain
(In consideration of the mutual promises set forth in this
Agreement, the Parties agree as follows.).
Example of consideration
See below and formulate critics
A and B agree that B may distribute As Products
in the Republic of Rwanda for a period of ten
years(?)
2. A and B agree as follows. A shall make its
products available to B. B shall distribute As
products in the Republic of Rwanda for a period
of 10 years from the date of this agreement.(?)
3. A and B agree that B shall distribute As
Products in the Republic of Rwanda.
In the first:
1. A has not promised to do anything
2. B has not promised to do anything( May allows B to
perform or not).
In the second: it lacks the criteria for termination, the time
when both parties are bound.
It can be: A may terminate this agreement at any time that B
becomes insolvency/ on ten days 'written notice to B..
3. Absence of a termination provision. Parties are not bound
forever( illusory).
Covenants: A promise to do or refrain
from doing something.
The covenants memorialize the promises that

are being made by the parties.
Examples include promises to deliver certain
goods or to refrain from particular
activities.
Example
See below and formulate critics

A shall deliver her horse Black Beauty to B on
October 1, 2017. The horse shall be in good health.
B shall pay A 500,000 Frws.
What happens if A does not?
Does B have to pay if A does not deliver the horse?
What if A preforms but on October 2?
Good heath?
Condition and Warranties
Conditions and warranties identify the
assumed facts underlying the agreement.
These sections represent the real heart of the
deal and tend to be heavily negotiated.
An example would be a warranty that the
goods to be sold are in working order
Example of conditions
The owner shall pay the contractor only if the owner is
satisfied with the contractors performance.
The insurer shall pay for the loss on condition that the Insured
furnishes proof of the loss within 60 days of the loss( the
obligation of the insured is clear but that of the insurer?)
The purchaser shall not be obliged to purchase the property if
the purchase price exceeds the reasonable value of the
property.
The insurer shall pay the insured for any loss by fire occurring
on the premises.
Example of warranties/disclaimer
Seller warranties that the goods are as described in
this agreement, but no other express warranty is
made in respect to the goods. If any model or sample
was shown to the Buyer, such model or sample was
used merely to illustrate the general type and quality
of the goods and not to represent that the goods
would necessary be of that type or nature.
The parties agree that the implied warranties of
merchantability and fitness for particular purpose
and all other warranties, express or implied, are
excluded from this transaction and shall not apply to
the goods sold.
Indemnification
The indemnification portion of the contract
deals with the allocation of liability in the
event that all does not go as planned.
Questions to be addressed in this portion of
the contract include who will be liable for
what, and to what extent.
Example of indemnisation
In the event of late delivery, B Shipping Co.
will refund all transportation charges paid.
We will not be liable for any loss or damage
resulting from delay, non delivery damage to a
package except as noted above. This includes
loss of sales, income, interest, profits, attorney
fees and other costs, but is not limited to
these items.
Example of indemnisation
In the event of a breach or repudiation of this
contract Seller, Buyer shall not be entitled to
any consequential damages in excess of
.Frws. This limitation shall not apply,
however, to damages for injury to the person
if the goods are consumer goods.
Example of Specific Performance
Seller and Buyer affirm that the goods sold
under this contract are unique and can not be
purchased on the open market or
manufactured specially.
Breach and Cure
Although promises are not necessarily made
to be broken, that possibility must be
considered when drafting a contract. What
will constitute a breach of the agreement?
What opportunity will the parties have to
cure the breach?
Termination& Remedies
Termination
When negotiating a contract, special attention should be given to exit
provisions.
Well-drafted termination provisions are among the most valuable contractual
protection
This section should identify under what circumstances the parties can
terminate the agreement and the procedures for termination.
Contracts sometimes grant the parties the right to terminate upon the
occurrence of certain specified events. These can include (but are not
limited to):
Insolvency, bankruptcy or liquidation
Merger of the other party
Change of control of the other party
Changes in governmental regulations
Failure to meet certain specified performance levels
Force Majeure Clauses
In drafting force majeure clauses, parties may
rely on general clauses or specifically
enumerate which events will 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
ASSIGNMENT
Form a group of five students

1. Write a short story( max page)
2. Formulate background
3. Change that background into a preamble
4. Add to that preamble consideration, conditions, warranties, mode
termination and liquidated damages.
Clauses that Address the
Possibility of Future Litigation
Choice of Law
Amendment and Waiver
Arbitration
Integration and Severability
Notice
Signature
Clauses that address the possibility of
future litigation
Too often, a situation that might have been
quickly and easily resolved by simply referring
to well-drafted contract language turns into
costly and time-consuming litigation.
Whether the contract is simple or complex,
clauses that address the possibility of future
litigation should never be overlooked.
Forum Selection Clause
Forum selection clauses specify the place
where lawsuits will be filed in the event a
dispute arises between the parties to a
contract.
Specifically, the parties utilize such clauses to
expressly agree to litigate all disputes arising
from the contract in a specific jurisdiction and
venue.
Choice of Law Clause
Parties may also negotiate which laws will
govern their contract. Specifically, choice of
law clauses specify the legal jurisdiction under
which the agreement shall be governed and
construed.
Alternative Dispute Resolution Clause
Many types of agreements contain alternative dispute
resolution clauses that obligate the parties to submit
their disputes to arbitration or mediation rather than
litigation. Alternative dispute resolution procedures are
often cost-effective and enable
disputing parties to pursue their claims more quickly
than traditional litigation. Through the use of
alternative dispute resolution clauses, the parties can
agree to such specific matters as: whether the
arbitration will be binding or non-binding; how
the arbitration provision is to be triggered; where the
arbitration would take place; which rules will govern
the arbitration proceedings; and the selection of the
arbitrator
Time is of the Essence Clause and
Amendments Clause
A clause can also be inserted to provide that, in
relation to certain events, time is of the essence.
This means that time periods and limitations
must be strictly observed or else the contract is
terminated.
Sometimes the parties want to change the
agreement. A typical amendments clause
providing for this possibility would state that the
agreement may be amended only in writing and
must be agreed to by an authorized
representative of both parties.
Survival Clause/Severability
Clause
It is customary to specifically provide for the
survival of an obligation after the termination of
the contract.
If the contract is ever litigated, it is possible that
a court could rule that only a part of the
agreement is invalid, illegal or unenforceable. To
provide for this possibility, an agreement can
provide that the invalid, illegal, or unenforceable
part can be severed from the agreement and that
the remainder of the agreement can continue in
full force and effect.
Currency Clause
When negotiating international agreements, it
is wise to insert a clause specifying the
currency in which money owing under the
agreement is to be paid. This can also come
into play in the event a court awards damages
under the agreement. Consideration should
also be given to specifying a conversion date
in this clause( Monaie de compte et monaie de
paiement).
Contract Interpretation Issues
(Article 66-76)
When the terms of an agreement are expressed clearly and
comprehensively, the fact of contract formation and the
extent of each partys commitment can be ascertained with
relative ease by the interpretation of the language in the
written contract.
However, problems arise in cases where the parties fail to
express their assent adequately, leave a material aspect of
their agreement vague or ambiguous, or fail to resolve or
provide for a material aspect at all. Obviously, such
problems can arise when insufficient attention to detail is
given in drafting the contract; similarly, poor drafting can
result in the contract not clearly reflecting the parties
expectations. Indefiniteness can thus result from
vagueness, ambiguity, omission or irresolution.
Problems of Vagueness and
Ambiguity
Vagueness results when a term is stated so
obscurely or in such general language that one
cannot reasonably determine what it means.
Ambiguity results when a term is capable of more
than one meaning. Ambiguity can lie in a word
itself or in the structure of a sentence; ambiguity
can also result from an unclear sentence
construction.
Sometimes, the parties meaning can become
clear if interpreted in context.
Omitted Terms
If a term is omitted, it simply is not there. The agreement
would have a gap regarding that particular aspect of the
parties relationship.
Unresolved Terms
Unresolved terms result when the parties have raised an
issue in their agreement, but have not yet settled it, leaving
it to be resolved by agreement at some later time. In such
cases, indefiniteness results from the parties deliberate
postponement of agreement on the particular term.
Nevertheless, an agreement to agree is not regarded as
definite enough to create a firm and final contract.
Contract Interpretation Problems
Many cases under dealing with contract

formation refer to a requirement that there be a
meeting of the minds. Instead of asking if the
parties intended the same thing, the objective
theory of contracts looks at their
communications.
Because of the inexactness of language, problems
of interpretation are present in every contract.
However, being aware of the possibility of
interpretation problems, the drafter can write the
contract with greater precision.
Interpretation is defined as the process of
ascertaining the meaning of the language of the
contract in order to determine its legal effect.
These are causes of ambiguity which necessitates
interpretation:
The dafter may have acted hastily or with inadequate
preparation
Communication between lawyer and client may have
been inadequate
The parties may not have foreseen the problem
The parties may have been intentionally indefinite
When drafting a contract you need to ask
yourself these questions:
- what I am I trying to say?
Could it be interpreted in more than one way?
How could I say it better?
Rules of interpretation
Three primary rules of interpretation:
1. words are to be given their plain and
normal meaning; except
* usage may vary the normal meaning of words
*Technical words are to be given their technical
meaning(article 68)
*where possible, words will be given the meaning
which best effectuates the intention of the parties.
2. Every part of the contract is to be
interpreted, if possible, so as to carry out its
general purpose.
3. the circumstances under which the contract
was made may always be shown.
IF AFTER APPLYING THESE RULES, THE MEANING
IS NOT YET CLEAR, THERE ARE SECONDARY
RULES
SECONDARY RULES
* Obvious mistakes of writing, grammar or
punctuation will be corrected.
* the meaning of general words or terms will
be restricted by more specific descriptions of
the subject matter or terms of performance,
*A contract susceptible of two meanings will
be given a meaning which render it valid
SECONDARY RULES
*Between repulsive clauses, a possible
interpretation which removes the conflict will
be removed.
* a contract will, if possible, be interpreted so
as to render it reasonable rather than
unreasonable.
Words will generally be interpreted most
strongly against the party using them.
Words will generally be interpreted most
strongly against the party using them.
In case of doubt, the interpretation given by
parties is the best evidence of the intention.
where conflict between printed and written
words, the written wording governs.
Particular & General
Husband shall maintain hospital and major
medical insurance for the minor children of
the parties, with coverage equivalent to that,
currently available through his employment.
Wife shall pay all uninsured medical expenses
incurred on behalf of minor children.
Interpretation:
- what are the obligation of the husband?
What are the obligation of the wife?
Wife shall pay all uninsured medical, hospital,
dental, ocular, orthodontic, and prescription
drug expenses incurred on behalf of minor
children. The use of the list.
The use of particulars: Expressio unius est
exclusio alterius: the expression of one thing is
the exclusion of another.
But. Is the list exhaustive?
Eg: the use of including but not limited to ..
Use of connectives
AND : conjunctive
OR : disjunctive
Sometimes problems may raise:
See for eg the case of Criminal Law
A and/or B or C . What is its meaning?
Examples
A shall ship apples and oranges
A may ship apples and oranges
A may ship apples or oranges
A shall ship apples and/or oranges
Listing conditions or criteria
When listing alternative or criteria, if the
intention is to use the exclusive or, providing
that one or the other but not both of the
conditions or criteria must be present, that
restrictions must be clarified.
Eg.
The corporation shall make a contribution to
an organization that is: educational;
charitable; or fraternal.
Modifies
Sometimes, it is difficult to determine
whether a single adjective modifies only one
noun or a series of nouns.
Eg. Seller shall ship frozen vegetables or fruits.
If the seller ships fresh fruit and frozen
vegetables, has it breached the contract?
Seller shall ship frozen
1. vegetables; or 2. fruit
And Seller shall ship frozen vegetables; or fruit
Listing conditions or criteria
In this example, the or is read inclusively: the
contribution could be made to an organisation
that possesses one or more of the
characteristics.
Eg. The corporation shall make a contribution
to an organization that has not more than the
one of the following : educational; charitable;
or fraternal
A Checklist for
Drafting Good Contracts
The drafter of a contract wants to craft a document
that accomplishes the objectives of the parties while
protecting the interests of the client.
To accomplish this, the drafter must be able to
predict what may happen between the parties, to
provide for each contingency, and to protect the
client with remedy. While each contract involves
different concerns, depending on the subject and the
context, all contracts involve common requirements
and considerations.
For all drafters, a checklist can ensure that the
contract will contain the necessary substantive
provisions and that decisions about those
provisions will have been made by design, not
by accident.
The occasional drafter, a checklist is a invaluable
reminder of content and form that might otherwise
be y accident. forgotten.
For the experienced drafter, a checklist effectively
reminds the drafter when boilerplate or often-used
language is inappropriate, that special circumstances
require special language.
Determine the substance of the
contract
A. What does the law require that a contract
include?
* Does the contract include provisions that
meet the requirement for formation?
*Does the contract avoid potential defenses to
formation?
Does the contract include provisions that
determine under what circumstances
performance should be excused or late?
A. What does the law require that a contract
include?
*Does the contract include appropriate
remedies for a breach?
define its effect on third parties?
Does the contract meet any additional
requirements imposed by the Law?
B. Does the contract meet the requirements of
the client?
*Does the contract include provisions that
achieve the clients goals in entering into the
contract?
reflect the degree of risk that the client is
willing to assume?
Analyze the audience
Has the drafter identified who will be the
primary and secondary readers of the
contract?
Has the drafter considered how each reader
will use the contract?
Has the drafter considered what each reader
already knows?
What is each readers attitude about the
contract?
Organize the material
Does the contract include a title that
accurately expresses the nature of the
contract?
Does the contract begin with an introduction?
Does the introduction include essential information of the party
names? Does the introduction include other optional
information concerning the place of business or the date?
Does the introduction exclude other substantive information?
Do the parties state their mutual agreement to the terms of the
contract?, Is the introduction written in complete sentences?
Does the contract include an appropriate
closing?
Is the closing governed by law? Does the
closing include a signature line for the parties
signing the contract? Does the closing include
the name of the person signing?, Does the
closing include the title or capacity of the
person signing? Does the closing include
signature dates for each party?
Draft the contract
Are the sentences clear?
Are the sentences short?
Are proper connectors used?
Are conditions clearly identified?
BAD ENGLISH
Bad English Plain English
The means by which How
Entered a contract to Contracted
Filed a counterclaim Counterclaimed
Filed a motion Moved
Filed an application Applied
Adequate number of Enough
For the reason that Because
In the event of If
In light of the fact that Because
Notwithstanding the fact that Although
Notwithstanding Despite
Cause of action Claim
In order to To
At this point in time Now
Until such time as Until
Whether or not Whether (usually)
During the month of may In may
By means of By
As a consequence of Because of
A distance of five miles Five miles
At a later date Later
Is of the opinion that Believes
BAD ENGLISH
At the time at which When
At this point in time Now
Be means of By
By reason of Because of
During the course of During
For the purpose of For, under
For the reason that Because
Inasmuch as Because
In a manner similar to Like
In all probably Probably
In addition to Besides
In accordance with By, under
In association with With
In back of Behind
In case of If
In close proximity Near
LEGALISTIC STYLE
At the present time Now
Due to the fact that Because, since
In as much as
During such time as While
For the duration of During
In as much as Because
Notwithstanding the fact that Although, even if
Prior to Before
Pursuant to Under, in
accordance with
Subsequent to After
That certain A
With reference to About
Not honest Dishonest
Did not remember Forgot
Did not pay any attention to Ignored
Did not remain at the meeting Left the meeting
Did not comply with Violated
Failed to comply with
Give consideration to Consider
Is applicable to Applies to
Make payment Pay
Give recognition to Recognize
Is concerned with Concerns
Type of Term Definition Effect/Purpose
Creates contract and tort
A statement of fact made
Representation liability. If untrue and may
by one party to another.
be grounds for rescission.
A promise that a fact is Creates contract liability if
Warranty
true not fulfilled
A promise to do or refrain Creates contract liability if
Covenant
from doing something. not fulfilled
Creates permission for
party to choose between
A right to choose what
Discretionary Authority stated actions or to act
action to take.
pursuant to a specific
standard.
A predicate to a duty.
Establishes the
Condition to an Obligation Failure of a condition is not
circumstances that must
(Condition Precedent) a breach.
exist (or not exist) before a
party must perform.
Establishes the
circumstances that must
Condition to Discretionary
A predicate to a right. exist (or not exist) before a
Authority
party may exercise
discretionary authority.
A transfer of rights to Constitutes all or part of one

Present Transfer of Rights
property partys performance.
SOME TIPS IN CONTRACT
DRAFTING
Use the present tens
Contract describes events that will take place in
the future. Yet because parties see a contract
as continuously speaking, the drafter should
write the contract in the present tense.
Eg. If any party to this agreement shall die,
then.
If any party to this contract dies.
Draft in gender-neutral language
Documents employing gender- neutral
language make better model. You will use
most of your documents that will sometimes
refer to a woman, a man or even to a
corporation. When assembling a new
document based on a model, you have a
number of choices:
Replace the gender-specific pronoun with
every time to suit the particular transaction.
. Replace the pronoun once with neutral gender
language that will appropriate for all
transactions.
Eg. When drafting, a lawyer should be sensitive
to the needs of his client
When drafting, lawyers should be sensitive to
the needs of their clients
Use the second person, since you is also gender
neutral
Eg. When drafting, you should be sensitive to the
needs of your clients
Use an article instead of using a pronoun
Eg. When drafting, a lawyer should be sensitive to
the needs of the client
Use the name of the actor throughout the sentence
When drafting, a lawyer should be sensitive to the
needs the lawyers clients
Use both the masculine and feminine pronoun
When drafting, a lawyer should be sensitive to
the needs of his or her client
SIGNATURES
The last portion of a written agreement will be
a place for all parties to affix their signatures.
It is imperative that parties signing in a
representative capacity indicate that. Thus, if a
party to an agreement is a corporation, then
the signature line should clearly indicate that
the individual signing is in fact doing so on
behalf of the corporation.
SIGNATURES
For the same reasons, if an individual is
entering into an agreement both in an
individual capacity and in a representative
capacity, the individual should sign multiple
times, once in each capacity. Even if the date
is included in the Preamble or Introduction, it
should also be included at the end with the
signature lines to show date(s) of signatures.
SIGNATURES
Who can sign?

Contract Drafting Ilpd

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Contract Drafting Ilpd

Diunggah oleh

Hak Cipta:

Format Tersedia

CONTRACT DRAFTING

Lecturer NDATABAYE Rwamo

Eventually, a second type of court was created to hear those cases -

Consistency of style and presentation makes the job of a

It is that lawyers hold/use precedents (templates) for the

When drafting a contract, it must be very clear

No person other than the tenant, his spouse, children,

The tenant shall not permit a person other than the

The title usually identifies the type of agreement,

The covenants memorialize the promises that

See below and formulate critics

Form a group of five students

Many cases under dealing with contract

A transfer of rights to Constitutes all or part of one

Anda mungkin juga menyukai