James Martin, an attorney in St. Petersburg, Florida has an article on his website regarding 50 tips for writing contracts that stay out of court. Most of the suggestions are good… a few are a little dated. This is my response to the dated things on his list:
3. Ask your client for a similar contract. Huh? If your client has a similar contract, they probably don’t really need you. Now, I’m not advocating reinvention of the wheel. If there’s a pre-existing solution to the problem, by all means, use it. But I’m guessing that someone’s coming to you to draft the agreement because you have the skills. More importantly, however, is that their template/sample probably contains a LOT of issues. So it’s usually 110% easier to start from scratch (or from your form) and customize it to your client’s specific needs.
4. Check the form books and treatises for a contract form. and 5. Buy forms on disk or CD-ROM. I don’t know who first created form books, but they’re not as good as one might think… and they’re not necessarily battle tested, either. You’d be better off getting a template from someone else you know if you don’t know where to start. There are exceptions, of course, but still – be careful (see the second part of my advice for #3 above).
6. Don’t let your client sign a letter of intent without this wording. Actually, my advice is to NEVER sign a letter of intent, regardless of the wording. As I’ve said before, a Letter of Intent is usually just a poorly written contract. Don’t get caught up in that mess.
9. Identify the parties by nicknames. This isn’t a hard-and-fast rule. Use nicknames only if it actually makes things easier to draft AND read. Be careful about using descriptive terms as nicknames (customer, vendor, consultant, etc) because other forms of that word could appear in the agreement. Use the “Find” feature of your word processor to discover if this is true.
12. Include recitals to provide background. I know a lot of people love these. But I hate them. I hate reading them and I hate writing them. On the other hand, for complex deals where the agreement could apply to many different things and you want to be clear on what the contract is really covering, this is the place. But for a standard software agreement, the place to list the products is in a product schedule… that way you can use the same license and only add additional product schedules w/o having to amend the agreement itself to modify some “Now therefore, the parties agree to license Word Processing application.” type of language.
17. Title it “Contract.” Actually, the better advice is to simply make sure that it doesn’t say “proposal” or some other transient contract type (like “letter”). Granted, I like document titles “Software Licensing Agreement” or “Amendment to Master Services Agreement”. But putting “Contract” in bold at the top of the first page is silly and WAY outdated.
24. Write number as both words and numerals: ten (10). I agree with Ken Adams on this one. Use the standard rules for numbers: words for zero through ten and numerals for 11 on up.
25. When you write “including” consider adding “but not limited to.” Not worth adding. Ever.
26. Don’t rely on rules of grammar. WHAT!?!?! OK. Look. Use plain English wherever possible. Write clearly. Using superior grammatical skills. If you don’t have such skills, don’t draft contracts.
29. Be consistent in grammar and punctuation. Well, at least Mr. Martin shows consistency in his inconsistency regarding grammar.
30. Consider including choice of law, venue selection, and attorneys fee clauses. Consider? Absolutely include choice of law and attorney’s fee clauses (though in some cases attorney’s fees won’t ever be granted… but it doesn’t hurt to ask). On the other hand, you’ll almost NEVER get venue if the other side understands it well enough to ask for a different location. But if you’re both in the same location, it never hurts to add it in to make sure you won’t be dragged out of state.
32. Define a word by capitalizing it and putting it in quotes. and 33. Define words when first used. No and No. Define words in a definitions section up front. Unless you only have an average of one defined term per section. Then you can define “in line”. Otherwise it just gets too ornery to try to make sure you define the term the FIRST time you use it. This is especially true when definitions end up getting used in the definition of other defined terms.
34. Explain technical terms and concepts. If you’re using terms that laypeople can understand, the only technical terms that should appear should be in a statement of work or other descriptive document regarding the work. As such, it should be written so as to be understandable by the people that have to abide by the contract. Judges and lawyers can find technical people to explain technical terms. The only time you should explain technical terms is if there’s a reasonable disagreement in the technically-educated community as to the usage of the term.
35. All contracts should come with a cover letter. Not necessary. If your contract is so difficult as to not be able to understand how to sign it, you’ve got a problem. The best thing I’ve seen so far? “Sign Here” tape flags that you put on the side of the document they’re supposed to sign for each signature line. Then paperclip your business card to the front with a post-it note attached thanking them for their help and asking them to sign and return one of the two originals.
38. Use your word processor’s spelling and grammar checker. Yes, but don’t rely on it. Two, to, too, toe. Their, there, they’re. Through, thorough. Notice anything? They are all real words and spelled correctly. Spell checker isn’t going to flag any of these. Grammar checker is no better: “A parakeet is not a bluebird.” is grammatically correct. But if you intended to say that a parakeet isn’t blue, the prior sentence is not correct but won’t be flagged.
42. Save the drafts as multiple files on your computer. Yes, but not how it was recommended. Unfortunately, using periods in your filename is still problematic for some operating systems. Weird abbreviations for drafts, comparisons, etc are also hard to decipher. Instead, try this: “filename vX date initials.doc”. So if you have a file called MasterService and it’s the 4th iteration being saved on September 29, 2009 by Jeffrey I. Gordon, the filename would be: “MasterService v4 092909jig.doc” Why do I do it this way? Well: a) it keeps the files in draft order in virtually all file systems (Windows, Mac, Linux); b) it notes which version it is (saves on confusion about which document is the latest); c) notes the date it was created; d) notes who created the draft. Sometimes I’ll substitute my company’s TLA instead of my name… but usually, I like my initials better to let me know that I was the author of that version of the document. When I get the last version that becomes the final, I change my initials to FINAL – so the name would now be: “MasterService v10 101509FINAL.doc”. This lets me know that v10 was the final and which version was signed.
44. Print the contract on 24 pound bond paper instead of 20 pound copier paper. Not worth the cost of paper. Especially if you want the other side to sign first – ask them to print two originals, sign both and send to you… you can’t control the paper it’s printed on. Besides, if you’re using a contract management system, you’re going to scan and forever more look only at the digital version, so the paper is irrelevant and not worth the added expense.
47. Initial every page of the contract. Wholly unnecessary unless you don’t trust the other side and you’re signing first. But as I’ve said before, if you don’t trust the other side, you shouldn’t be doing the deal in the first place.
48. Identify the parties and witnesses who sign by providing blank lines below their signature lines for their printed names and addresses. and 50. Add a notary clause that complies with the notary law. Witnesses and notaries aren’t necessary unless required by law for the specific type of contract you’re closing (usually for real property, but I’m not sure it’s required for any other type… anyone know for sure?). Many businesses have a notary on staff, but unless the document is required to be signed “under seal”, this also is usually not a requirement and is an added expense to some (and added time/effort for everyone).
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