Drafting contracts can be a complex process, and even seasoned professionals can make mistakes. A well-drafted contract protects all parties involved, clarifies expectations, and provides a clear roadmap for dispute resolution if issues arise. Conversely, a poorly drafted contract can lead to costly litigation, damaged relationships, and unforeseen liabilities.

Here are the top 5 mistakes to avoid when drafting contracts:

1. Lack of clarity and ambiguity

One of the most common and dangerous pitfalls in contract drafting is a lack of clarity. Ambiguous language can lead to different interpretations by the parties, which inevitably results in disputes. Every clause, term, and condition should be expressed in clear, concise, and unambiguous language. Avoid legal jargon where simpler terms suffice but be precise when using legal terminology.

Example of what to avoid: “Services will be completed in a timely manner.” Better: “Services will be completed within 30 days of the contract effective date.”

Always ask yourself: Could someone unfamiliar with this agreement understand exactly what is expected of each party? If the answer is no, revise for clarity.

2. Failing to define key terms

Many contracts involve specific industry terms, technical jargon, or acronyms. Failing to clearly define these key terms within the contract itself can lead to serious misunderstandings. A “Definitions” section at the beginning of the contract is often a good practice to ensure everyone is on the same page. This is especially crucial for terms that might have different meanings in different contexts.

Example: If a contract refers to “Deliverables,” ensure there’s a clear definition of what constitutes a “Deliverable” within the scope of that particular agreement. Is it a report? A physical product? A service milestone?

3. Not including all necessary parties and details

A contract is only as strong as its foundation. Failing to correctly identify all parties involved, including their full legal names and addresses, can invalidate the agreement or make enforcement difficult. Beyond the parties, ensure all essential details of the agreement are included. This includes:

• Scope of Work: What exactly is being provided or performed?
• Payment Terms: How much, when, and how will payment be made?
• Term and Termination: How long does the contract last, and under what conditions can it be ended?
• Confidentiality: Are there any obligations regarding sensitive information?
• Dispute Resolution: How will disagreements be handled?

Leaving out critical details creates gaps that can be exploited or lead to confusion.

4. Overlooking important boilerplate clauses

“Boilerplate” clauses might seem standard or even trivial, but they play a crucial role in the enforceability and interpretation of a contract. These include clauses such as:

• Governing Law: Which jurisdiction’s laws will apply to the contract?
• Entire Agreement: States that the written contract is the complete and final agreement between the parties, superseding any prior discussions.
• Force Majeure: Addresses what happens if unforeseen events (like natural disasters) prevent performance.
• Assignment: Can the parties transfer their rights and obligations under the contract to someone else?
• Waiver: Clarifies that a delay in enforcing a right does not mean that right is given up.

Neglecting these clauses can have significant consequences, especially in cross-border agreements or situations where unforeseen events occur.