Lately I had a number of interesting conversations with several clients on the topic of how to write a good contract, and I thought I would share some thoughts and words about it.
Knowing the technicalities of the law which will be applicable to the contract and of the rules of contract writing are all essential elements, in the literal sense as different jurisdictions have different rules as to what are the essential elements for a contract to be considered valid.
However this is not enough. I have seen contracts which were technically perfect from a legal point of view but which were incredibily long, disorganized, unstructured, difficult to read or at the opposite spectrum lacking information and incomprehensible.
I have identified a few rules which may useful to keep in mind.
A contract is not a piece of modern art or jazz improvisation. It is more akin to a building: it needs a structure that can be built upon. The clauses should have a structure based on order and flow of ideas. My tip: write as if you were building a house. Create the structure first, then fill in the walls and floor and ceilings, then add windows and decorations.
A contract is not a fictional story to be savoured with a long tea. It should be like a good espresso: it needs to be strong, concise and to the point. My tip: write it so that someone who is not a lawyer can fully understand it and make comments on it even thought they do not know the legal technicalities.
A contract is not a private conversation between two persons who know each other well and can omit information they already know. It should not omit information “because the parties know what they are talking about”. Writing a good contract means writing for an audience. It means creating a document that may be read and understood by a third party who knows nothing about the parties or the commercial deal: it could be a judge in the most unfortunate of cases, but more likely it will be an investor or a bank doing due diligence, or a new manager taking over the relevant business unit a few months or years down the line. My tip: write for an imaginary audience, write like theatre, write clearly and open the sentences so that they can be understood and heard from the last rows.
