Our Top 8 Tips for Drafting Clear and Concise Contracts

The world of contracts seems (almost) a little Game of Thrones like – who can do what to who and how quickly. Only the dragons in this story are usually the lawyers who are left to unite the “armies” (aka contracting parties) and ensure peace among the nations. “Flags. Games. And stories. And the Great Game is terrifying”.

Sounds a little OTT, right? Yip. We know. But the point is, when it comes to contracts, no matter which side of the contract you are on (contractor, subcontractor, consultant or client) it often seems like - with all the wherewithal’s and wherefrom ‘s  - heavy legalese aplenty, it’s simply a matter of which party can hold what over who. Not a quid pro quo type of arrangement. More like “we will throttle you with our immense power until you deliver” kind of thing. And that is a little terrifying. 

And the problem with this? The parties to the contract don’t always know exactly what’s potting. And that cannot be right. Can it?

Well, we believe there is a better way. For all parties. 

Contracts are an everyday kinda thing  

In today’s day and age, it’s common place for one company to contract with another one. There’s seemingly an understanding that with certain specialised specialities - the use of suppliers to undertake some of the more complicated, and naturally specialised work is often required. 

In fact, suppliers have become critical in not only delivering services a contracted company is not able to (because they just don’t have the required skills or necessary specialists employed by them) but they have also enabled more efficient output at a lower cost. And with the amount of competition that is rife in today’s market’s it’s no wonder companies outsource some of their business operations in order to secure the “big fish” deal. 

Ultimately this results in two companies entering into a contract that will govern their relationship, often with the corresponding mindset of a strategic partnership that shares common goals and purposes. At least, that’s the intention anyway. 

The intended contract will seek to govern everything from what a subcontractor has agreed to provide a client (as an example) to what the client will pay for the subcontractors’ services. And – on the face of it at least – it’s all fine and dandy. Until negotiations start. Then it’s each man, woman, or non-binary person for themselves. And that often leads to a very poor taste in the mouth for those entering into the contractual relationship. 

This is a generalisation – we realise that – but when it comes to entering into contracts from the get-go it seems as if parties to the contract default to an almost antagonistic mindset with the focus being on a pure transactional arrangement. Shared strategy be gone! The contracts become the stand in shields against one party abusing their “power” over the other.

Not ideal. 

So, parties naturally agonise over every conceivable scenario and then try to put everything in black-and-white. The result? A barrage of contractual clauses, including the ever-so-popular “termination for convenience,” clause which provides one party with the right to terminate the contract (usually after a specified period) because “they want to” – hence the word “convenience”. One party dangling their “power” ever so threateningly over the other. 

And all this serves to do is encourage the kind of relationship that seeks to undermine the intended synergy between the parties. And that – in turn – only serves to undermine the purpose of the contract entirely.

And what’s the point in that? 

There has got to be a better way!

In the article A New Approach to Contracts, authors David Frydlinger, Oliver Hart, and Kate Vitasek argue that -

“the remedy is to adopt a totally different kind of arrangement: a formal relational contract that specifies mutual goals and establishes governance structures to keep the parties’ expectations and interests aligned over the long term. Designed from the outset to foster trust and collaboration, this legally enforceable contract is especially useful for highly complex relationships in which it is impossible to predict every what-if scenario.”

We couldn’t agree more. 

A contract needs to be all about a mutual goal where both parties to the contract align their interests. And for us at least, this starts with drafting a clear and concise agreement that sets out each parties rights and responsibilities, the mutual goal and desired outcome. In a way that everyone not only understands but embraces – not because they are going to obtain the upper hand, but simply because it meets with a synergistic approach to a mutually beneficial relationship. 

In an effort to encourage this type of contract drafting, the wording needs to be clear, unambiguous and in a language that everyone can understand. 

So, without further ado….

Our Top 8 Tips for Drafting Clear and Concise Contracts 

1. Start off on the right footing – in order to draft a contract that clearly reflects both parties intentions towards one another, it’s key to begin the relationship on the same page. Parties need to establish a partnership mentality, fostering a relationship of trust – openly setting out their aspirations for the working relationship, the goal they need to achieve, and any concerns one party may have. By openly discussing these three things – aspirations, goals and concerns - the parties to the contract ensure that they remain aligned, working in synergy with one another. This may seem “airy fairy” like, but with this foundation established moving on to negotiating terms regarding each party’s responsibilities, fees or costs involved and due dates for deliverables (the formal terms of the intended contract) becomes a lot easier. “With the right mindset, the development of the contract becomes a joint problem-solving exercise rather than an adversarial contest”. 
2. Remember the three C’s - Be Clear, Be Concise, Be Consistent (as the title of our article suggests)  -  ambiguity is the cause of most disputes – especially where contracts are concerned. So, above everything else it’s crucial that when drafting a contract, the language used must be clear. This may sound like an obvious one, but avoiding unnecessary words that are verbose is pointless. Does it serve to add anything besides its verbosity to the contract? If no, then avoid ambiguous terms and flowery language like you did COVID. The basic outcome here is – draft a contract that any layperson can understand. This helps ensure not only that the contract is straight-forward, but that the contract isn't creating any “accidental” obligations, conditions, or distinctions. The next point is to be consistent. If you define a term, take “Buyer” as an example, stick with that term throughout the contract. Don’t change to “Purchaser” halfway through the contract and expect everyone to be on the same page. The goal here is not creative writing. Repetition of a defined term is the way to go. Keeping things consistent, keeps things easy to understand.  
3. Avoid repetition – yes in the paragraph above we say that repetition is a good thing. But we mean when you have defined terms or specified names (formal things). Here when we say, “avoid repetition”, we mean unnecessary words and phrases. For example, we know that the purpose of the contract is to agree to something. When mutual consent is stated upfront, for example “the parties to the contract agree as follows” we don’t need to keep saying the same thing repeatedly throughout the contract. We have established that the parties are agreeing to something, so get into the nitty gritty already! The continuous affirmation of the agreement is unnecessary. So, eliminate unnecessary wordiness and improve readability by just including what is strictly necessary.
4. ‍Avoid legalese as much as possible – fanciful legalese like heretofore, hereinafter, wherefrom, and whereinafter are all unnecessary and can often lead to confusion. There is no need to flaunt knowledge of vocabulary or strength in penmanship. Remember strictly set out what needs to be included in the clearest and most concise way possible. The idea here is for any layperson to be able to understand the wording in the contract. Also, avoid using two words that mean the same thing. What’s the purpose of doing that? Unless a statute or other binding law repeats words and you are quoting from that text, leave them out. Pick one word – even if it’s a simple one – and go with it. Leave everything that’s unnecessary out. By removing excess words, and replacing chunky sentences with simpler ones, the contract becomes more readable. And that’s the exact point.
5. Remember to clearly define all terms – as we said above when discussing consistency, define all important terms right at the start of a contract. If you start to draft a contract and start using formal terms in the body of the contract, remember to go back and include that definition in the definitions clause as soon as possible. That way you avoid anything being unclear. For example, if your contract involves the buying and selling of property, the property must be defined well enough for it to be identified by any third party that is not a party to the contract i.e. doesn’t have inside knowledge of the intention of the contract. This will apply when you are identifying the parties to the contract as well. 

Avoid language that may infer legal significance - some words have a different meaning to a lawyer (and will therefore have greater significance) then they would to just an ordinary Joe in the street. And this difference in meaning between the legal definition and the normal understanding of a word, can lead to confusion and ambiguousness in a contract. 

1. It’s therefore crucial to stay away from words that could possess a specific legal meaning – especially if there is no intention to apply that legal definition. Leave it out and pick another word!
2. Numbers not just in numerals, but words too – it’s so easy to make small errors when drafting contracts, like dropping a zero or forgetting a decimal point as an example. But those decimals or zeroes could be crucial in a contract – especially when defining cash or foreign exchange rates. By including the numbers as well as the words – by physically saying one thousand and fifty-two rand - you ensure that a costly error is avoided. Courts will usually apply the wording to numbers. But it’s always better to be safe than sorry. 
3. Remember the reader – when drafting a contract, a good guideline is to remember who the contract is being drafted for. Consider which parties will be using this contract. That should dictate how you set things out – remembering to be clear, concise, avoiding ambiguity and repetition of unnecessary words or phrases (and no legalese). It will also be important to consider – if the relationship between the parties was to turn sour and litigation proceed – how a court would construe the contract? Is there anything uncertain or is everything clearly and concisely set out? Ask yourself this  - will the parties and the court understand the contract in the same way?

(Sources used and to whom we give thanks - Contract Nerds, Rocketlawyer and Harvard Business Review).

For more information on contracts, please refer to our articles on contract law here and here. 

Should you require assistance with drafting a clear and concise agreement – avoiding all “clear and present danger”, please get in touch with one of our suitably qualified attorneys – we are more than happy to assist and support you as you navigate what can be a complicated, costly and time consuming process. 

In the meantime, if you have any questions on the information we have set out above or have a personal issue which you want to discuss with us, please don’t hesitate to contact us at NVDB Attorneys. 

We are a law firm that considers honesty to be core to our business. We are a law firm that will provide you with clear advice and smart strategies - always keeping your best interests at heart!