DRAFTING A CONTRACT/ AGREEMENT?
Contracts play a vital role in every business as well in commercial litigation. In this era of commercialization, every business requires to enter into a perfect contract to run its business smoothly.A Legal Contract or an Agreement is not only a mere piece of document for signing between the two parties. It sets out responsibilities and liabilities for parties thereto and remedies for breach along with cover for any unforeseen losses which may occur during the term of a contract or in the future. It also creates certain responsibilities, conditions, time limit, monetary issues, manners, etc. so that the contract is properly sealed failing which it may have a fatal result.
Therefore a Legal Contract has to be drafted with special caution and by keeping in mind certain clauses which are sine qua non. A good contract must be simple, clear, and futuristic and must have certain options and definitions.
WHY IS CONTRACT VETTING NECESSARY?
Before entering into a contract, it is important for the Parties to go through the clauses of the contract cautiously, Parties need to authenticate the contract to check the insertion of all their obligations as well as rights. If there is any precariousness in the provisions of the agreement, the parties must make it proper and valid. Each party shall ensure that all the terms of a contract are legally valid and shall be binding on both the parties. ThereforeContract Vetting is a procedure that involves a critical and careful examination of documents to be executed in terms of the law. It also includes thorough due diligence of the clauses of the contract by ensuring that all safeguards, monetary security, legal remedy, etc. shall betaken while vetting.
An ineptly drafted agreement will not only lead to confusion in wordings but may also result in losing your stand due to inconsistency created by the usage of the words. An Agreement is always read, understood, and analyzed on the wordings and the expressions used. In cases where the Agreement is signed between the parties in no situation any artificial word can be added or to it.
Therefore, it is always advised to get the document vetted by a legal attorney/ legal expert to prevent the business from unforeseen losses.
PROCEDURE FOR CONTRACT VETTING
Assessment: The first and most important step of vetting is the assessment of the document.During the assessment of the document, the Attorney will understand expectations, desired objectives, and subject matter from the parties to the Contract.
Amendment: After analyzing the document the Attorney will look whether the Contract contains the appropriate clauses. If the Contract does not have appropriate clauses that are in accordance with the subject matter and the desired objectives, an amendment to existing clauses is done along with the insertion of new clauses so as to make the contract comprehensive and water-tight.
Finalization: After necessary iterations, the agreement/contract is finalized and the timeline as well can be appreciated, time taken for contract vetting depends largely on the complexities of the subject matter covered.
THINGS TO CONSIDER WHILE DRAFTING A LEGAL CONTRACT
A legal contract has to be drafted keeping in mind of the following ingredients:
Research is essential to get hold of the relevant laws which applies to the transaction.
Thorough Due Diligence is essential one should collect all the necessary clauses that are required for drafting the contract.
Definitions are most valuable when it comes to the interpretationof any clauses. Make sure that every technical word used in the agreement is defined. Also, words, which could be misinterpreted, should be set.
Duties & Liabilities forms a central part of the Contract. It is crucial to define and lay down the responsibilities of both parties. Obligations may arise while doing any business therefore, liabilities need to be undermined and well laid in the agreement.
Guarantees, Warranties, Indemnities, etc. are the well-set liabilities. Each of these should be well understood in the context and defined wherever required. It should also be clarified that such liability is being created in on happening of which event.
Intellectual Property Rights has a vast scope of application. It is suggested to take a check if any problems with IPR could come up during transactions and relevant additions should be made to the draft agreement.
Dispute Resolution Method clause has been adopted in the commercial contracts which provide for arbitration and lays down the procedure to be taken in case of a dispute.
Jurisdiction and Termination even if parties agree to resort to an alternate method of dispute resolution, they still have the option to approach a court of law in case of a dispute. Therefore, to prevent any future trouble, it is imperative to lay down the law and the court, which shall have jurisdiction in case of litigation.
In addition to that, it is also important to lay down conditions and procedures to terminate the agreement. It might happen on the part of both the parties that they might not wish to go on with the business transaction.
HOW CAN CONTRACTBAZAR HELP YOU?
Contract vetting will require at least two to three readings. One reading to understand the transaction, the parties, and to check that all appropriate clauses exist. Another reading would need to check clause by clause and include some which are missing or exclude those which appear vague and irrelevant. The final reading would be to understand the risks the client is exposed to and then build in clauses to cover the perceived risks.
A contract is an agreement enforceable by law, the last three words being critical. The checker must ensure that the contract has been vetted to ensure enforceability. Our team of legal experts understand the bargain, analyze the precise facts and circumstances, and thereby suggest amendments to the contract after analyzing the contract obligations. At Contract Bazar, we guarantee a better understanding of the contract and thus, security to our clients.