Commercial Contracts - Drafting Techniques and Precedents

Overview

How aware are you of:

1 The impact of the Human Rights Act on the law of third party rights?
2 The significant difference between signature as a simple contract and execution as a deed?
3 The contra proferentem rule?

These and many other vital questions are all covered in this expert report

When you sit down to draft a contract today you’ve got to be thinking of so many different issues. For example, more cases are now being argued with reference to the Human Rights Act: how might your contract be interpreted in the light of it and what are the dangers of infringing it.

The distinction between exclusions of liability and limits of liability can cause problems. As of course can the difference between best endeavours and reasonable endeavours. For all points of the law and critical distinctions, you will find crystal-clear explanations and guidelines to a host of case studies illustrating the law and its application.

A practical guide to drafting commercial contracts

It will:

• Ensure that you are fully aware of all changes to the law
• Sharpen your commercial awareness
• Improve your drafting skills
• Increase your appreciation of the rules and guidelines set out by the courts
• Help you better achieve your commercial objectives
• Radically reduce your chances of making an expensive mistake

Content

The commercial and legal objectives

• Getting started: preliminary considerations
• Drafting precedents
• The wishes and needs of the client
• Four philosophies of drafting
• Case study: the need to draft terms that create mutual understanding and expectations
• Rectification
• Mutual understanding: plain intelligible language
• How to make a term clearer
• The uses of formulae to clarify commercial objectives

Strategic ends: some important decisions to be made about the terms of the contract

• Time: is it to be or not to be of the essence?
• Positive obligations: firm undertakings or endeavours?
• Third party rights: should these be permitted, restricted or excluded?
• Controlling assignment
• The creation of a trust of the benefits arising from a contract
• The Contracts (Rights of Third Parties) Act 1999
• Termination provisions: the choices to be made

Structuring the contract

• The title and the description of the parties
• The recitals
• Recitals and the matrix theory
• The terms of the contract
• The signature: simple contract or execution as a deed?
• Pre-contractual arrangements
• Post-contractual arrangements
• What is the effect of an ‘entire agreement’ clause?
• What is a framework agreement?

How to manage the risks

• Risks
• Insurance
• Indemnities
• Boilerplate clauses
• Exclusions and limits of liability

How the courts will interpret what is written

• Ambiguities, absurdities and technicalities
• The contra proferentem rule
• The interpretation of indemnities
• ‘Consequential’ loss or damage
• The knock-on effect of amendments

Control by the courts: valid and invalid terms

• The rule against penalties
• Unfair terms: some common law principles
• Unfair terms: the scope of The Unfair Contract Terms Act 1977
• Unfair terms: some cases on the test of reasonableness
• Unfair terms in consumer contracts
• Other tests of validity under statue

Appendices

• Appendix 1 – List of cases cited
• Appendix 2 – List of statutes and other enactments mentioned in this report

The author

Dr Robert Ribeiro, Barrister, has been an independent lawyer, public speaker and business consultant since 1989. His work includes the drafting and negotiation of commercial contracts and advising upon legal problems arising in commercial dealings. Robert’s work also includes the provision of public seminars and in-house training for commercial clients. He is author of the book Engineering Contracts – A Management Guide and Damages and other Remedies for Breach of Commercial Contracts (also published by Thorogood).