In order to facilitate consistency amongst the various model contracts used throughout a law firm or company and to enable the use of contract building blocks across different model contracts (whether in Word-form or as a template available in a contract assembly software application), it is strongly recommended to develop a reference set of contract drafting conventions. Such contract drafting conventions should not only establish the principles to be applied throughout the model contracts but should also reflect the choices made in relation to the model contracts and model contract clauses.
This book in its entirety may serve as a ‘contract drafting convention’ but for practical use a high-level summary and a short list of key choices is preferable. In case of doubt, reference may be made to this book.
Part A. Best practice rules of contract drafting
|BEST PRACTICE RULE||EXPLANATION, EXAMPLE|
1. Stay close to layman (business manager) interpretation and use ‘plain English‘
2. Use the present, active tense and personalise sentences
3. Simplify: keep sentences short and delete unnecessary words
4. Use the singular
Never use, or delete, (s) and everything that it triggers.
5. Be consistent (rigorously)
6. If possible, use shall + infinitive and not the notional verb as an auxiliary
This avoids contract assembly complications: if the notional verb is also the auxiliary verb, the automated contract should provide for the plural and the singular each time it is used (e.g. “Purchaser shall permit” as opposed to “[Purchaser permits][Purchasers permit]” and everything this triggers).
7. Bring exceptions, limitations and qualifications together
8. Definitions will be marked bold and not underlined, and not placed between quotation marks
Example: Product means the products listed in…
9. Do not explain ‘why’ (avoid using enabling or in order to)
If it is important, it should be addressed in the recitals, conditions or warranties. Less important matters should become clear from the obligatory text (or be self-explanatory).
10. Obligations (and covenants) will be strictly separated from recitals, definitions, conditions precedent and representations
Recitals (whereas-clauses) and representations should be no more than a statement of fact. Obligations remedying any failing representation should be addressed separately (i.e. in a separate clause).
11. Avoid legalese
12. Numbers in a provision should be simple and must avoid risks of mistakes
13. Names and document references should be in italics if they are capitalised but not defined in the contract itself
International Chamber of Commerce; REACH, Good Manufacturing Practices, IFRS, the U.S. Export Administration.
14. Avoid referencing statutory provisions
For example, “group of companies as defined in article 2:24b of the Dutch Civil Code“.
15. Do not use without limitation after including
16. Do not use it being understood
17. Use be entitled to instead of may
The use of may is susceptible to ambiguity.
18. Name the ‘own party’ and use the functional reference for the ‘other party’
For example, Weagree vs. Licensor.
19. Reduce cross-referencing
Cross-references might trigger contract assembly complications: as such there is no objection against cross-referencing, but both the referring and the referred-to clause should always appear in the resulting document.
Part B. Preferred terminology in contracts
TO BE REPLACED
Party or Parties
party and parties.
Purchaser, Seller, Customer
Buyer, Vendor, Supplier, Service Recipient, Company.
in / of / to this Agreement
herein, hereof, hereto (i.e. also parties hereto, on the date hereof).
Article for articles; Section for sections (level 1 and 2); and item for paragraphs, sub-sections and enumerations (level 3 and higher)
Clause, sub-section, paragraph, subparagraph and (for articles) section.
Schedules for schedules to the main agreement and Annex for attachments to schedules
Exhibit, Appendix, Attachment.
Part C. Presentation
- An agreement must get a cover page if it exceeds ten pages or if it is confidential.
- An agreement should get a table of contents if it contains more than ten articles or more than ten pages.
- Contracts must be marked confidential (and not strictly confidential or privileged) on each page.
- Use schedules to the main agreement; if a schedule itself contains exhibits, the exhibits will be called Annex.
- A list of schedule is included underneath the table of contents (unless it breaks over the pages, in which case it will be placed on a separate page).
- The footers will identify…