Top Tips for Drafting Effective Contracts

Written contracts represent one of the most vital components of any business venture. Whether you are hiring a new employee, or entering into a share purchase or trade agreement with a new contracting party, carefully structuring your arrangement in writing – and stipulating each requirement both you and the other party should be held to – ensures a level of safety no commercial venture can afford to do without.

It is, however, a complicated and highly nuanced area of commercial law. Read more below for some of our top tips for drafting strong and effective commercial contracts for your business ventures.

Be Clear About Your Language

As with any legal document, the terms used within it must be clearly defined, and will hold a highly specific meaning in order to ensure that the contract is concise, without rendering itself open to interpretation.

As a result, you need to show particular care when drafting it; misusing a defined term could hold significant ramifications, and may even mean that the contract makes a stipulation that you did not intend. This is one of the main reasons why it is so important to work with an experienced legal team as you draft new contracts.

Be Mindful When It Comes to Restrictive Covenants

Imposing restrictions on the contracting party, such as non-compete clauses or curbing their ability to communicate with clients, is an excellent way of protecting the interests of your business – provided it is done fairly and unambiguously.

This can be a complicated area to get right. Some courts will not enforce restrictions if they are deemed to be too far-reaching or uncertain.

Lay Out Your Terms and Conditions

If you wish for the contract to be subject to your own terms and conditions, then you must make this explicit at every opportunity. This can be difficult to prove, so ensure that you retain records of your requirement, as the last party to make this statement will typically retain that right.

This is particularly important if the contractual party is operating in another country. If you wish for the contract to be subject to UK legislation, for instance, then this must be stipulated prior to the moment at which the contract is signed.

Following its Completion, Act in Harmony with the Contract

You must ensure that your behaviour is always in accordance with what has been stated within the contract. If your conduct diverges from what has been stipulated, or you attempt to alter the terms orally, then this can lead to significant issues for both parties.

Any amendments should be made in writing, and should be signed by both parties, with the same care and attention showed to the original contract.

Work Closely with Your Legal Team

Although it isn’t strictly necessary, it could be helpful to work with solicitors local to you. It can make life easier if they are close by, so whenever any issues, queries, or concerns arise, you can address these quickly. If your business is based in Gloucestershire, for example, then working with experienced solicitors in Cheltenham will entail a much closer working relationship, and ready access to advice as and when you need it.

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