There isn’t one way to draft a contract or legal document, whatever you may have been told. These tips will help you create a better contract.
In England/Wales, there is no specific format or style or content for most contracts. It doesn’t even have to be written down.
Writing is required for transactions involving land and guarantees; deeds require specific content and execution (signing). Writing is recommended for all commercial agreements as it helps to have on single record of what you agreed to do.
Tip 1: Write your agreement down.
When you write your agreement, you need to ensure it provides evidence of five legal requirements or necessities to show it is a legally binding contract. The legal five are: offer, acceptance, consideration, intention and certainty. Read more in Is Your Letter of Intent a Contract?
In practice, the first four of those are really easy to find. What you should concentrate on is adding enough information for an independent by-stander to know what was agreed.
Tip 2: Focus on creating certainty.
Although there is no duty of good faith in English law, the law sometimes intervenes to ensure fairness ie to prevent one party taking unfair advantage of the other.
In England/Wales, fairness is imposed either by laws (eg the Unfair Contract Terms Act 1977) or by the judges. One judge said that “contracts should prevent either party from taking unfair tactical or pricing advantage of the other, in accordance with such practices or abuses as were known to have taken place, or be likely to take place.”
Tip 3: Adopt fair contracts to avoid the court’s blue pencil.
Make It Clear
If you want your agreement to be applied as you intend, it needs to be clear. Otherwise the law (judges) can intervene. As Ken Adams explains in Nexus Between Contracts and the Law, your contract can be changed when the law decides:
- if it is a ‘legal’ contract
- if each term is allowed;
- if your contract meets the formalities required
- extra terms to fill in the gaps.
You won’t be surprised to know, that if the law has to decide what your contract means, that may not be the same as what you think it means!
Tip 4: Make your contract clear to ensure it is interpreted as you intend.
The law does not re-write your bad bargains. It may intervene to add or imply terms into a contract to ensure that it makes sense as a commercial transaction.
Some terms are implied due to the nature of the transaction; others because a specific term appears to have been intended by the parties (although they forgot to express that intention within their contract); others because the contract is meaningless without it.
But the law never seeks to improve the contract:
“The court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be.”
Tip 5: Check your contract makes commercial sense (not just legal).