Contract drafting is an art form. Some contracts are more appealing than others. As much as anyone wants to create a formula for contract drafting, not all contracts are created equally. Contracts are designed to be easily read and understood. Contracts are self-contained explanations of a relationship between two parties. Language does that, but so does style. Contract drafting style is important.
As exciting as grammar is, a couple of rules need to be followed to ensure you have a contract that is easy to understand and will be accepted by the legal community who will, at some point, probably be dissecting the contract. Follow these rules:
- Follow clearly accepted grammar guidelines. Contract drafting is not the time to test grammar theories.
- Be clear and use commonly accepted practices. Remember, contracts will be read by lawyers, judges, and juries. The lawyers and judges are the ones you need to convince.
Grammar is more important than legal tradition.
Contracts must be drafted so they may be clearly understood, not so they look like every other old legal contract. Even though lawyers and judges will be reading your agreement, if it is clear and there is no mistaking what the agreement between the parties is according to the contract, you will not have much pushback, even if your form looks different.
In my years of contract drafting, I have developed a number of stylistic items that I believe simplify your contract and make sure your contract can be better understood and you don’t lose all of the pieces. Here are a few things to help you draft a more readable contract:
“Agreement” versus “agreement”
THIS EMPLOYMENT AGREEMENT (this “Agreement”), is dated July 30, 2013, and is between…
Why do lawyers feel it is necessary to define the employment agreement as this “Agreement”?
Instead, simply use the phrase “this agreement” whenever you are referencing the agreement itself. That term clearly refers to the document in which you read the reference. One of the main issues with using “Agreement” as a defined term in the contract is that any reference to another contract will be capitalized. Most contracts contain the term agreement in their name. That means a quick scan of a document for the word “Agreement” may not help you find what you need. If, however, you do not capitalize the internal reference to the agreement you are drafting, you can spot the difference between a referenced agreement and a reference to the agreement. This will help with the reading of a contract, especially if it is being skimmed to find specific information.
Another issue with defining “Agreement” is that is clogs up the document. Again, a quick scan of a contract can help you locate defined terms. Why mess up the flow of your document by adding an defined term that will be used several times in the contract, but rarely be needed in a search.
Not capitalizing an internal reference to an agreement will help you run a quick search for internal references. It is easy to sort the internal references from the external ones by simply selecting “Match Case” when searching in your word processor of choice.
No matter what the legal community thinks or how long things have been done, there is no legal benefit to defining the term “agreement”. In fact, in my opinion (and I read a lot of contracts), it makes reviewing your contract more difficult.
Initialing Every Page
How many times have you signed a contract, and (even though there was no place for it) you were asked to initial every page. This accomplishes little and makes the final copy of the contract unattractive and, if you have someone who initials like John Hancock, may make portions of the contract difficult to read.
The reason you are asked to initial every page is that, for some reason, it is believed to *prove* you read (or at least saw) every page. This developed over years of litigation where the argument was that “page 3 was not in the contract at the time it was signed”. So, as the legal community often does, they came up with a solution to protect themselves in litigation without actually changing the way things have been done since the founding of the legal profession. Some lawyers have taken the step to place small initial lines at the bottom of the contract.
This does not always work.
One of the issues with this solution is that pages can stick together during signing. Another issue is that, typically, agreements are reviewed well before the signing (if at all) meaning that the signers are simply going through the motions when signing. If you have the signers initial every page, and they miss one, you have created an evidentiary problem of (potentially) enormous proportions. What happens when there is an issue with your contract and the language that helps you is on the page that is not initialed. It becomes “he said, she said” in court and that can be expensive. You may still win, but that isn’t the point is it?
There is another option.
Instead of having the signer initial each page, make it clear, in the contract, how many pages are there and where in the contract the reader is. If, instead of simply numbering the pages, indicate the number out of the total pages. For example:
Employment Agreement Page 1 of 10
If this reference were at the top of each page, it would be clear to the reader and the signer that they should have seen 10 pages. Notice also, in the example that it also uses the title of the agreement. This helps you know where you are in which agreement. This is especially helpful if multiple agreements are involved in the same deal or signed at the same time. Also, practically, pages get mixed up at signings, so this helps organize all of the pages back in the right order with the right contract. After all, signing the contract doesn’t matter if you can’t put all the pieces together later.
It is your decision how you want to continue numbering the exhibits to a particular contract. Sometimes, including the exhibits in the total page count for the contract can help establish that all of the pages are included. It is important to make sure your contract is clear and you have made sure anyone reading can easily understand the contract placed before them.
Contracts are designed to flow. Contracts are often skimmed and they serve as a representation of an agreement that was reached between two parties working together. The issue is, when contracts are reviewed, the parties disagree over the agreement they have. The contract is designed to clear that up. For that reason, contract sentences should be short. Contract paragraphs should only contain one point. Anything that works with a particular paragraph, should be placed in a subparagraph. That is where numbering paragraphs and indenting is helpful. Numbering systems vary, but the most useful system is one that allows the sub paragraph to reference the primary clause. This system allows, even when simply scanning, the reader to see how certain terms are grouped together. My preferred contract numbering system looks like this:
This system helps make internal references easier. Sometimes it is difficult to remember where in the indention scheme you are after multiple pages of sub paragraphs. This helps keep the reader focused on what the sub paragraphs are referencing.
I use the titles of paragraphs as a way to quickly scan contracts. It serves, especially in shorter documents, as a table of contents. Technically the titles used in a paragraph are not part of the contract. They should, however, be used to help the reader. Titles of paragraphs should help readers quickly locate needed information. This can be anything from when payment is due to how much a penalty should be. A contract should be an easy reference document to make sure you are following the agreement. If you are using simple paragraphs and each paragraph only has one topic, titling the paragraph should be easy.
The title of a contract clause should include the information most likely to be needed from the clause. This will help someone locate needed information quickly.
One Final Tip
If at all possible, try to keep the signature block from spilling over to a page by itself. Though this can be corrected by numbering your pages, it is too easy to lose the signature page. This is not always avoidable. Though, sometimes, you can change margins or make some other adjustments. If you cannot avoid having a signature page on a page by itself, make sure to reference the fact there is a signature page following. The numbering system will help this, but you want to make it as easy as possible to locate all of the important pieces to your contract.