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Principles of Effective Contract Drafting Endi Piper

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Principles of Effective Contract Drafting Endi Piper. Overview. Why Study Contract Drafting. Contract negotiation and drafting is an exercise in selling. Selling the parties on executing the documents, now; 2. Selling the parties on voluntary

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slide3

Why Study Contract Drafting

  • Contract negotiation and drafting
  • is an exercise in selling.
  • Selling the parties on executing the
  • documents, now;
  • 2. Selling the parties on voluntary
  • performance, after execution; and
  • 3. Selling a court or other entity on
  • performance after voluntary
  • performance has ceased.
slide4

Purpose of a Contract

  • Contracts attempt to articulate:
  • The rights and obligations of the
  • parties;
  • Provisions for events or contingencies
  • that while not expected, may occur.
  • Provisions that avoid any
  • undesired default provisions of any
  • applicable law.
  • Remedies and means of enforcing
  • or avoiding the rights and
  • obligations.
slide5

Role of the Attorney

  • Counselor to client
  • Advocate
  • Planner
  • Negotiator
slide6

Important Principles of Contract Law

  • 1. Mutual assent – intent to contract. There must be a “meeting of the minds.”
  • 2. Offer and acceptance.
  • 3. Consideration – bargain for exchange.
  • 4. Conditions – precedent and subsequent.
  • 5. Representations, warranties, covenants and conditions.
  • 6. Conclusion of a contract – expiration, termination, rescission.
slide8

The Deal Time Line

  • Most transactions follow a standard time line or chain of events.
  • General rule of thumb is that simple transactions take a shorter
  • period of time than longer transactions.
slide9

The Goal of Drafting – Precise Documents

Four elements of precision:

  • Accuracy.
  • Completeness.
  • Exactness.
  • Able to withstand hostile, critical
  • review.
slide10

The Form of Transactional Documents

  • Title
  • Introductory paragraph
  • Preambles/Recitals
  • Definitions or defined terms
  • Core substantive provisions
  • Representations, warranties,
  • covenants, indemnities,
  • guarantees, releases
  • Events of default and remedies
  • Boilerplate
  • Signature block
  • Exhibits and attachments
slide11

Characteristics of Plain English Drafting

  • 1. Short sentences.
  • Definitive, concrete, everyday
  • language.
  • 3. Use the “active” voice.
  • 4. Use tabular presentation.
  • Separate paragraphs and sections
  • with headings for individual or
  • different concepts.
  • Avoid the use of “legal jargon,”
  • Latin or other foreign terms.
  • 7. Avoid the use of double negatives.
slide12

The Drafting Process

  • Investigate the facts.
  • Investigate applicable law as needed.
  • Develop a contact list and task schedule by deadlines and
  • responsible party.
  • Prepare initial drafts, use precedents and templates where
  • appropriate.
  • Circulate drafts for comments and revise as necessary.
  • Negotiate and memorialize the final definitive documents.
  • Execution of documents.
  • Closing.
  • Post Closing adjustments and clean-up.
slide13

Who Drafts the Contract

  • Contract usually drafted by
  • the party with the most
  • leverage
  • Can control which issues are
  • addressed
  • Can control the pace of the
  • transaction
slide15

Drafting the Contract Involves…

  • Determining what the parties agreed to
  • Putting those terms into
  • words
slide16

Talk to your Client

  • What is the deal?
  • Are there any relevant documents?
  • Letters or correspondence?
  • Financial statements? Etc.
  • Ask detailed questions about
  • conversations with the other party
  • Possibly have an initial conversation
  • with the other party…what do they
  • believe are the primary deal points?
slide18

Use Precedent? Why or Why Not?

  • WHY?
  • Saves Time
  • Contains Standard Terms
  • WHY NOT?
  • Hard to find perfect match
  • Precedent may be poorly drafted
  • May not contain necessary Standard
  • Terms
  • **Make sure the precedent was the first
  • draft and does not contain negotiated
  • terms
slide19

Use Precedent or Draft from Scratch?

  • Depends On:
  • 1. Type of Transaction
  • 2. Experience of the Attorney
  • How much time Attorney
  • has to draft
slide20

Prepare the First Draft

  • Draft based on information you have
  • Use precedent or draft from scratch
  • Discuss all questions/issues with client
  • while drafting to make sure draft mirrors
  • deal points
  • Re-draft after speaking with client
  • Send to client to review and possibly
  • redraft again before sending to other
  • party
  • Always send contract to other party
  • “subject to review of client”
slide21

Reviewing First Draft if From the Other Party

  • Review and have comments/questions
  • for your client
  • Review entire contract with Client
  • Prepare red lined mark-up for other
  • party
  • Include reasons for changes if
  • necessary
  • Review with other party in meeting or
  • via phone
slide22

Exercise #2: Halle Berry Independent Contractor – Use of Precedent

Vukani wants Halle Berry to provide

marketing services in the United

States.

You represent Halle Berry. In groups

of 3, go through the precedent and

make a list of what you would

change prior to sending to Vukani.

We will then discuss your proposed changes in each paragraph as a group.

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