During the contract drafting process, the key is to select the right words and avoid all of those that might lead to additional liabilities beyond the legal requirements. Everything that is included in the contract has to be precise and clear to avoid misunderstandings that could develop into serious consequences.
Here is a list of ten words and terms to avoid and five more to include in an accurate contract drafting. It’s important that you beware of words with absolute meanings and try to consider better words or phrases so as not to create legal traps.
Terms to Avoid
This term is vague when used to refer to the contract itself as an agreement. When you refer to your contract, you can use the phrase “this contract” instead because it is more precise. All contracts are agreements but not all agreements are contracts.
2. “The parties (expressly) agree…”
It’s implied that the parties agree to everything that’s included in the contract once they sign it. This is a really common phrase used in contracts, that could have the effect of affirming the contract underlying agreement. Unfortunately, the actual effect of the phrase is implying that other statements are less important. Instead, if you want to emphasize certain ideas, you can reorganize the contract or extrapolate on the idea in greater detail.
3. “Written notice”
If all the notices should be written, it is better to declare in the notice prevision that all the notices shall be written. This way, just use “notice” to avoid the implication that there is any other kind of notice, such as oral, will be acceptable.
4. “Unless otherwise agreed upon”
This phrase is logically unnecessary as long as both parties have the option to amend the contract. It could be necessary to address this if the contract includes any section where the parties expect a specific change related to terms that may change from time to time. In this case, you may also need to specify the way that change will be documented. The danger of unnecessarily using this phrase is creating the implication that some sections can be amended in an informal way.
The use of this word in everyday life has a different meaning than the judicial interpretation. Typically we interpret “immediately” to mean “right then”. The best way to refer to any action that shall occur is to use terms such as “forthwith” or “without undue delay”.
6. “Subject to Client’s Approval”
This phrase can often lead to disagreements because the actual interpretation of it implies any client’s whims, whether reasonable or not, shall be honoured. It is better to replace it with “subject to the client’s reasonable approval”.
7. “Or equal”
When referring to any kind of service or good, the legal interpretation of the term implies a duplicate. In order to avoid any future complications, it is better to incorporate wider terms such as “or equivalent”.
8. “Supervise” and “control”
Incorporating any of these two words in the contract will imply that the party will assume responsibility for the other’s work. An appropriate term that you could replace it with without assuming full responsibility for the other’s performance could be “coordinate with” or “in association with”.
9. “Thorough” or “Thoroughly”
These two terms are often interpreted as “perfect” or referring to a perfect performance. Using these types of absolute terms that can be easily used against you should be keenly avoided. In the case that you want to refer to efficient performance, you could use other terms such as “in accordance with professional standards”. By using this type of terminology, you will avoid any further complications related to the performance of your company.
This word used as a noun (sometimes written as “work product” within contracts) judicially implies a product, and can be easily replaced in your contract with “service”, “materials of service” or “deliverables”. Work as a verb refers to providing a physical service and can be replaced with “provide services”.
Words You May Add
Now that we have covered ten important terms to avoid, here are five words that you may wisely include when drafting a contract. The following list will show you the five most important words and clauses that have to be present in your contract to ensure a productive work relationship and avoid any legal dispute.
Using the term liability implies that the parties declare their intention to perform in a certain way and they will be responsible and accountable for performing as agreed upon. Parties might seek to limit their liability in the instance that certain things occur. For example, circumstances where the parties won’t be held liable for incomplete, delayed or insufficient performance. Any kind of “Act of God” such as a natural disaster, or changes of laws, will allow the parties to avoid liability.
This term is related to the concept of liability. Parties that agree to a contract include disclaimers in order to avoid responsibility for certain events. A disclaimer is appropriate instead of a liability in cases in which the contract exists between a company and a third party. This type of contract, with a specific time frame, may include a disclaimer that the document does not represent a contract for employment.
A breach of a contract is usually considered as one of the party’s failure to perform as specified by its contents. Usually, parties define what would constitute a breach of a contract in various clauses throughout the contract.
In the event of a dispute, the way it will be handled depends on the country or state where the contract has jurisdiction. Sometimes the parties may reside in different states, so it’s important to decide which laws will govern the contract.
The contract breaches can result in a very harmful impact on one of the parties to a contract, so there must be a remedy available to the parties in the event of a breach. These remedies usually include forms of damages which may include compensation for the losses or inconveniences incurred. Other remedies may also include an injunction, a demand for specific performance, or a rescission of the contract.
Whether you look for specific terms to avoid or include during contract drafting, it’s important to strive for your best performance in this stage in order to create the environment for sustainable work relationships. Avoiding terminology with absolute meanings will give you more freedom to perform your duties and including specific terms along the contract will also provide you with legally binding tools to solve any future discrepancy.