Contract
Drafting and Negotiation: A Guide to Ensuring Effective Agreements
BY- Shalini Afroj
Introduction
Drafting and Negotiation skills are the basic skills that a
legal professional must perceive in every case whether it is Arbitration,
Civil, Criminal or Corporate litigation. This fundamental skill enables them to
be an expert in their profession.
Legal firms and Start- ups are looking for such services, to
provide the same lawyers go for various diploma courses to up skill themselves
in order to meet new requirements of client such requirements include drafting
legal documents, assisting in legal aspects of business decisions, negotiating
with other parties. Hence, contract drafting and negotiation play a crucial
role in establishing clear and enforceable agreements between parties.
However, enrolling into a diploma course merely gives
insight into technicalities of drafting and negotiating and the major part
depends upon self-practice, the more you practice the more expertise you
acquire.
Therefore, the purpose of this article is to guide you
through beginning to the end of Drafting and Negotiation which
would be beneficial for all the legal professionals to understand and learn
these critical skills and apply the same in their profession.
Preparing for Contract Drafting
Before diving into drafting an actual contract, thorough
preparation is vital. It is extremely crucial to identify the objective and
result of forming a contract and understanding the expectations of all the
parties involved. Consider the following points during preparation:
A. Intention
Involved: Before
diving into drafting, one should always make sure he is aware of the intention
that parties are forming the contract with. In a contract every party has their
expectations involved, for a legal professional it is crucial to give an
accurate direction to contract.
B. Parties
Obligations:
Each party has a certain obligation that they are supposed to fulfill, if any
ambiguity arises it can lead to unenforceable of the contract. Therefore,
prepare an apparent draft of the parties' obligations before including them in
the final contract.
C. Gather
Information:
A contract includes various information about all the parties involved such as
their names, addresses and other business details. Thus, gathering all relevant
information beforehand is essential to review the same.
D. Applicable
Laws: Every
contract comes under the applicability of different laws that enable it to be
enforceable depending upon its subject matter and the nature of the contract.
For instance, the Sales Act is applicable to all “Sale of Goods” which deals
with selling of property between parties (Offeror and Offeree).
Key Elements of Contract Drafting
Effective contract drafting requires attention to detail and
a comprehensive understanding of the terms and conditions being agreed upon.
Here are some key elements to consider drafting an effective and precise
contract.
Simple Language: Drafting a contract, law professionals often use more technical and legal terms from old English that a lay man finds very challenging to comprehend. Even the government had shown its concern about the technicality of legal language, recently, Indian Government is making sincere attempts to draft laws in simple language, as much as it is possible.
B. Define
Terms: There are
several terms a contract contains which can have more than one interpretation,
can lead to ambiguity. Hence, defining those terms in the contract is crucial
to avoid misunderstandings and make each party comprehend terms and conditions
clearly. It is also imperative to avoid or resolve any future disputes among
parties if arises.
C. Parties’
Obligation:
Another important element, this describes parties’ roles and responsibilities
that are mentioned in the contract. This aids for the “specific performance” of
the contract if any party fails to fulfill its obligation as specified, the
contract will no longer be valid.
D. Dispute Resolution:
A contract always includes a clause that signifies the procedure for dispute
resolution. It sometime includes arbitration as a method for resolution by
means of mediation, negotiation or conciliation etc. Parties can opt for any of
these as per their need and interest.
E. Jurisdiction: Most contracts are entered
internationally or that are entered among different countries or states which
highlights the significance of a specified jurisdiction in a contract. Parties
can go before defined jurisdiction for any legal aid (if required).
All contracts have several different key elements, but these
(above-mentioned) elements are general and will always be key elements for each
kind of contract. It signifies the enforceability, effectiveness and clarity of
the agreement.
Negotiation Strategies
Negotiation skills are very helpful in every profession but
for legal professionals it has substantial benefits. Since, it enables a lawyer
to get other parties to come to mutual ground and agree upon. This agreement (Negotiation)
is the first step toward entering into a contract.
Furthermore, Negotiation has also been included as a method
for dispute resolution under arbitration. Wherein two or more than two parties
try to resolve the dispute through peaceful discussion. Thus, a lawyer must
know how to negotiate.
Strategies: -
Prepare-well: Negotiation is the conduct of a
peaceful mind. Sometimes parties go a little violent while discussion.
Therefore, a lawyer must have a peaceful state of mind to control other members
and get them to agree on a common ground. Thus, preparation for mindset is
needed.
B. Active
listener: While the
parties are discussing, a lawyer must actively listen to them. It helps finding
out the key areas of concern and measure cause of dispute. Furthermore, active
listening enables one to not miss out on any important information that a party
discusses and also generates thoughts to further direct the negotiation to a
mutual agreement.
C. Bullet
points list:
Whenever a party shares any relevant information, the one who has the
responsibility to conduct this negotiation must jot down key highlights. It
helps in appropriating important highlights of such discussion for the next
meeting.
D. Flexibility: when the parties are exhibiting
their intention, expectation or concern the lawyer should be able to understand
them and make necessary changes accordingly (if possible). This much of
flexibility is required to make them feel free from any burden or strict rules
Seek Legal Counsel
Drafting any contract
for the very first time may lead to ambiguity which can result in potential
disputes. Thus, seeking aid of legal counsel is essential to avoid conflicts.
Some requirements for legal counsel are mentioned below: -
A. Expertise
& Experience:
Those who are familiar with legal facts can provide their expertise in
finalizing the actual draft of the contract which does not include any unlawful
objects to make it valid.
B. Document
Review: Seeking
legal counsel would provide an overall review of the contract drafted and
outline necessary changes if required.
C. Risk
management:
This will work as a risk management tool that will fix everything prior to the
execution of the agreement.
Continuous Review and Improvement
Contract and
negotiation, both are a continues process that require modification with time.
A contract when it was drafted was according to the law which existed at the
that time, may require some necessary changes as per new law and other factors.
Similarly, when a negotiation is formed in the past it may require new changes
to keep it up to date.
Conclusion
Contract drafting and negotiation require careful
consideration and attention to detail to create effective and enforceable
agreements. By following best practices, preparing thoroughly, employing
negotiation strategies, and seeking legal counsel when needed, parties can
establish contracts that protect their interests and promote successful
business relationships. Regularly reviewing and updating contracts ensures that
they remain relevant and aligned with changing circumstances. By mastering
these skills, individuals and organizations can navigate the complexities of
contract creation and negotiation with confidence.
