A contract is legally binding agreement. Contracts may be written or oral, but many important contracts are often written and signed by both parties. Contracts are the foundation of the business world, and may be simple or extremely complex. Examples of contracts include sales agreements, real estate purchase contracts, employment contracts, confidentiality agreements, finder’s agreements, or insurance contracts, to name a few.

Drafting a contract is the act of writing out the terms and details of the contract, in order to outline the legal obligations of the two parties, so that they fully understand the terms of the agreement and their respective duties towards one another. Contracts may be drafted by anyone, but an attorney is often needed in order to create a reliable and secure contract, especially for more complex contracts.

For example, you may want an attorney to help you draft or review a contract involving a real estate transaction, in order to ensure your finances and the transaction itself are protected. Additionally, you will want a clear outline on the possible consequences, should the contract be breached.

How are Contracts Drafted?

Contracts may appear in many different forms, but one of the most common contracts is a standard form contract. A standard form contract (standardized agreement), sometimes referred to as an adhesion contract, is a contract between two parties, where the contract is drafted by one of the parties, and the other party has little or no ability to negotiate terms that are more favorable for them. Common examples of adhesion contracts include: insurance policies, housing/apartment leases, and tickets to events.

For instance, if you attend an event, such as a football game, there will likely be small print on the back of the ticket containing the terms that you are bound by, due to your purchase of the ticket. Thus, in order to allow for negotiations, many people choose to loosely base their own agreements on standard form contracts, instead of simply following a pre-set form contract.

The overall goal of drafting a contract is to ensure that each party thoroughly understands the terms and conditions in the contract. Therefore, the person drafting the contract should use clear and simple language, as much as possible. A contract full of legal terms and concepts is often not a good idea, as it could raise questions regarding the rightful interpretation of the contract, as well as if there was a “meeting of the minds”, or mutual agreement between the two parties.

Thus, if any words or terms are not easily understood, you should ensure to find out what they mean. If you are unsure as to your duties under the contract, don’t be afraid to ask, as it is very important for you to understand what you are committing to.

What is Contract Review?

Simply put, contract review is when a person signing the contract carefully reviews the document or has their lawyer review the document. As noted above, this is to make sure you fully understand the terms and conditions of the contract.

Contract review is an important step to ensure that there are less contract disputes in the future. When a contract dispute arises, the first thing that the courts look at is the language of the contract itself. If a problem were to arise, both parties can refer to the contract and pinpoint what is expected of them.

A clearly-written and easily-understood contract can reduce confusion between the parties. However, if a contract is not written clearly, legal issues may arise. Thus, it is important to thoroughly review or have an attorney perform a complete review of any contract, before you sign it.

Since contracts can be lengthy, and have become increasingly complex, many people often skim over paragraphs and don’t actually know what they are signing. For example, most people do not understand what they are agreeing to when they “accept the terms and conditions” of most online “click wrap” agreements for software.  Having a qualified business lawyer review your contract or contract draft may save you from a legal mess down the road.

There are numerous reasons why it is important to thoroughly review a contract, including:

  • Understanding the Terms of the Agreement: It cannot be said enough, you need to know exactly what you and the other party are signing. Terms and conditions should be clear, leaving no doubt as to what is expected of you and the other party;

  • Preventing Unconscionable, Illegal, and Voidable Contracts: No one wants to get in trouble, especially with the law. Unconscionable contracts occur when a contract is so one-sided that it is enforceable under the law. Additionally, there are many contracts that are illegal to make, such as a contract that was made for an illegal purpose, like gambling or hiring underage workers. Lastly, you often want to ensure that any contract you enter into is solid and not voidable, like contracts entered into with minors. Thus, it is important to review the contract, in order to make sure all aspects are legal, and that you are fully protected; or

  • Preventing Breaches of Contract: By having your contract reviewed now, you may save yourself legal problems down the line. If there is a disagreement, a proper contract review will enable you to have solid documentation to protect yourself.

Should I Hire an Attorney to Assist with Contract Drafting and Review?

As can be seen, drafting and understanding contracts can be a very complex process. Thus, it may be in your best interests to consult with a knowledgeable and well qualified business attorney.

An experienced business attorney will assist you from start to finish through the contract drafting and reviewing process, safeguarding you against any complications, errors, or misunderstandings. Additionally, they will help prevent other legal issues that arise from a poorly written contract, and represent you in court, if necessary.