Whether you're entering into agreements with suppliers, clients, or partners, a well-drafted contract will help you mitigate risks and lay the groundwork for a successful business. Here are my top tips so you can feel more prepared to draft your next contract.

My top tips for drafting solid contracts:

Written form: A contract can be written, oral or partly written/oral. Some contracts are required by law to be in writing, but in the majority of cases that is not a legal requirement. Despite it not being a requirement, you should always ensure that the commercial contracts your business enters into are in writing: this will reduce the risks of disagreements arising in the future over whether there is a contract, and what its key terms are.
Your contracts can then take various forms such as: standard or bespoke T&Cs, contracts for one-off supply, framework style contracts, etc…
Detailed scope of work and specifications: Clearly define the scope of work, as well as any requirements and specifications. This prevents misunderstandings and serves as a reference point throughout the term.
Parties’ obligations: The contract should set out clearly what each party is responsible for.
Term and renewal: Precise how long the contract will last for, and whether it will renew automatically or can be extended by the parties.
Payment Terms: Clearly outline the payment terms, including the cost of the goods/services, the dates on which payment will be due and how payment will be made, as well as any penalties for late payments. Don’t forget to include a price review mechanism if needed.
Intellectual Property Protection: If applicable, address intellectual property rights. Clearly state who owns the rights to any work created under the contract and outline any restrictions on its use.
Data protection: Your contract should include data protection clauses in the event personal data is being transferred or processed as part of the transaction.
Limitation of liability: Make sure you identify the risks involved in the transaction and limit your liability accordingly. You should always check if there are caps on either party’s liability in a contract as well as whether there are any exclusions of liability. These should be acceptable to the business and reflect the risk-level of the transaction, and will usually match your business’ insurance cover.
Insurance: Check whether there should be any insurance requirements under the contract.
Termination: Include clauses outlining the conditions under which either party can terminate the contract. Can either party terminate for convenience (i.e. without fault) and is there an early termination charge? This provides a clear understanding of the consequences of terminating the contract early.
Dispute resolution: It is important to set out from the start how disputes related to the contract should be dealt with: should it be via mediation or arbitration? Make sure you are comfortable with the governing law and jurisdiction clause, as that will affect the outcome of any dispute. You likely don’t want to agree to bringing the dispute in front of the courts of a country that is on the other side of the world!

It is important that you make sure that the risks involved in the transaction are appropriately addressed in the contract. You want to control your business’ exposure to those risks, and a well-drafted contract will serve that purpose.

Do you need any support with drafting contracts that protect your business’ best interests?

Get in touch so we can talk about it!

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