Contract drafting
⚡TL;DR
- Use correct words (shall, may, etc)
- Be consistent and precise both formally and content-wise.
Use correct words
When drafting contracts, using the correct word to describe your intent is key to ensure that the contract would be (if needed) interpreted in line with the intent upon drafting. While there can be some exceptions, it is generally best to always use the same words to express a given concept.
Best practices
Consistent wording is used to define "obligations", "rights", "representations and warranties", etc., in accordance with the below list:
Category | LEXR Standard | Example |
|---|---|---|
Performance of an obligation | hereby + present form | LEXR hereby grants a license to... |
Obligation | shall + infinitive | LEXR shall pay CHF 100 to ABC on 01.01.2025 |
Prohibition (i.e., obligation of omission) | shall not + infinitive | LEXR shall not disclose confidential information. |
Obligation imposed on a third party under the control of a party | shall cause to + obligation | The shareholders shall cause the Company to deliver a certificate of incorporation to ABC. |
Duty to cooperate | has the duty to + duty | LEXR has the duty to provide ABC with the following information: ... |
Policy (statement of fact) | Simple present | The agreement terminates two years from the signing date. |
Discretions (i.e., an option is given to a party) | may + infinitive | LEXR may increase the fees. |
Representations of current state | represents and/or warrants + content | LEXR represents that it is duly incorporated. LEXR represents and warrants that the use of the services does not violate third-party IP. |
Representations of future state | covenants + content | Buyer covenants that it will maintain a minimum of 30 full-time employees until 2027. |
Intentions (i.e., used in the preamble) | wish/intend + content | In order to increase its market share, LEXR wishes to acquire ABC. ABC intends to enter into a deal with LEXR pertaining to its purchase. |
Keep in mind that the party to which an obligation is imposed must be part of the agreement, meaning that they have to agree to it (usually by signing it).
The purpose of the preamble is to give the context to future readers, more generally, to the judges who will read the agreement if a dispute arises. Drafting it carefully means that the contract is more likely to be interepreted in accordance with what the parties intended.
Be consistent & precise
Consistency and precision are key when drafting a contract. This means:
- Use cross-reference to make sure that your internal references are correct (e.g., "Section 8 is reserved").
- Beware of typos.
- Consistently use defined terms. Defined terms are usually identified by using a capital letter (e.g., the Warranty). This ensures that a concept is defined, e.g., in art. 1, and will be used consistently in the whole contract. It basically works as a "code variable" and helps have a uniform contract interpretation.
Corss ref + typos, capitalizauoj s
Best practices
Cross-references: Once you're done drafting, use "ctrl-A + F9" to update all cross-references. After that, use "ctrl-F + Error" to look for any reference that didn't update.
Defined terms: Always double-check your defined terms. If one defined term is not used after it has been defined, there's no need to define it.
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