How do I draft a contract?

There is no legal requirement for a written contract in English and Welsh law to follow a structure, but learners of legal English find that contracts follow the same format whether it a one-page Lodger Agreement (to rent a room in a shared house) or a 100-page corporate contract.  

 

This article will help you understand the general structure of a contract but please bear in mind that this does not constitute legal advice and you should consult a competent lawyer before drafting or agreeing to any contract.

 

Learn how to draft contracts with our language course on clear commercial contracts

 

The structure of a standard commercial contract typically follows this pattern:

 

Preamble/The names and registered addresses of the parties

Recitals

Definitions

Conditions precedent

Agreements

Representations and warranties

Boilerplate clauses

Schedules

Signatures

Appendices

 

Preamble

The preamble to a contract should include the title, date and parties to the agreement.

 

THIS SALES AGREEMENT made and entered into this [__] day of [month] [year] (the “Effective Date”), by and between, [First Party], a __________ limited company having its registered office located at [street address], [Country] (“First Party”), and [Second Party], (“Second Party”).

 

The Legal English Grammar Guide is a great introduction to legal writing

 

Recitals/Introduction

The sample contract then continues with Recitals that (i) provide an introduction to the agreement and why it is being entered into, and (ii) identify important terms and possibly third parties. Instead of the traditional recitals, some contracts have an introduction that serves a similar purpose. The recitals/introduction are not considered to be part of the agreement and are therefore typically not enforceable.

 

WITNESSETH WHEREAS, First Party is engaged in the manufacture of products described on Schedule A (the “Products”);  WHEREAS Second Party is engaged in the business of marketing, selling and distributing products within [Country] (the “TERRITORY”); and  WHEREAS First Party desires that Second Party market, sell and distribute the Products in the Territory;

 

Definitions

The definitions section provides a definition of each individual term of the contract according to the person who drafted the contract (who is known as a draughtsman in the UK).  An example of a definition can be seen below:

 

“Vehicle” means only the private passenger automobile or truck listed as the covered Vehicle in the Application, which is used solely for personal and private use.

 

Writing clear and precise definitions is essential to writing good contracts in legal English as this document may need to be interpreted by a lawyer in the future. The standard recommendation of our teachers is that you write definitions as you go through the contract and then cut and paste them into the definitions section.  This seems the easiest way to get your point across without getting lost in the detail of the contract.

 

Conditions precedent

Conditions precedent are those conditions that need to be in place for a contract to be enforecable.  They are considered to be outside the main terms of the contract.  A simple example could be that you agree to deliver bottles of water to someone on the condition that they pay for the bottles to be in a designated place.  If the bottles are not there then the water cannot be delivered.

 

Body

The body is the heart of any contractual agreement and provides the reason why the contract was entered into. Topics such as the key terms of the agreement, the type and amount of “consideration”  and the parties’ ongoing rights, duties and responsibilities are discussed in this section.

 

NOW THEREFORE in consideration of the mutual covenants herein contained, and other good and valuable consideration, the parties hereto mutually agree as follows:

 

1.1 First Party hereby appoints Second Party as First Party’s exclusive partner in the Territory, and grants Second Party the exclusive right to promote, market, sell and distribute the Products in the Territory under First Party's Brand name(s) and Trademark(s).

 

1.2 Second Party accepts such appointment and agrees to use its commercially reasonable efforts to promote, develop and increase sales of the Products within the Territory.  

 

1.3 Second Party shall not actively sell the Products in territories that (i) First Party allocated exclusively to a third party or (ii) First Party reserves for itself or an affiliate.

 

Boilerplate clauses

“Boilerplate” clauses are ready-made, all-purpose clauses inserted into many kinds of contracts. Despite being commonplace, boilerplate terms play key administrative roles. If something goes wrong and the parties to a contract end up in arbitration or court, a boilerplate term may be at the centre of the dispute. Our example includes two boilerplate terms, (i) force majeure, and (ii) governing law.

 

2.1 Neither party shall be in default hereunder by reason of any failure or delay in the performance of any obligation under this Agreement where such failure or delay arises out of any cause beyond the reasonable control and without the fault or negligence of such party.

 

2.2 The provisions of this Agreement shall be construed and the performance thereof governed in accordance with the laws of England and Wales, and the Parties agree to submit to the exclusive jurisdiction of the English courts in respect of any claims arising under this contract.