A contract is generally defined as a legally binding agreement that is made between parties, and that acknowledges the rights and duties that govern the arrangement. Contracts can be formed either through writing or by oral agreement. However, this article only refers to written agreements.

Contract drafting involves writing down the terms and conditions of an agreement. The parties to a contract may go through several drafts and negotiation sessions before the official contract is finalized. The overall goal of contract drafting is to create a legally binding document, in writing, that is clear, concise, and as close to the parties’ intentions as possible.

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One benefit of the drafting process is that it allows the parties to discuss the terms of the contract before it becomes legally binding. This can help prevent legal disputes over the contract from arising in the future. If a legal dispute does occur, it can also serve as evidence of the parties’ original intentions and their obligations.

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Contract drafting can also be used to ensure that the parties understand their respective duties, and can be used as guidance if any issues arise while they are satisfying the contract. This is especially true in situations where the contract involves complex conditions.

Although contracts may be drafted by any individual, it is generally recommended that a lawyer draft and review the final terms in order to ensure that the contract is legally valid and binding. The parties to a contract will generally be the ones to decide how a contract will be drafted; however, drafting can also depend on the type of contract that is being created. An example of this would be how employment contracts contain provisions and specific terms that differ from the language that would be found in confidentiality agreements.

Generally speaking, most contracts follow a basic format and include standard components, such as:

• Important words that must be defined;
• Technical terms which indicate the beginning and/or signal the end of a contract, such as a signature block;
• The rights and duties of the parties;
• How the parties can terminate the contract without breaching the contract;
• General provisions; and
• Special clauses, such as insurance policies.

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Additionally, regardless of the type of contract, all contracts must contain the following elements:

• An offer;
• An acceptance of that offer;
• Consideration, generally money;
• Identification of its parties;
• All parties must have legal capacity to enter into the agreement;
• The subject matter of the contract must be legal;
• Mutual agreement between the parties; and
• The parties must have a mutual understanding of their rights and duties under the contract.

Some examples of common contract drafting terms and conditions include:

• Force majeure;
• Arbitration clause;
• Indemnification;
• Assignment;
• Confidentiality;
• Warranties;
• Choice of law and forum selection;
• Time is of the essence clause;
• Severability; and
• Liquidated damages clause.

These are either:

• Events that trigger conditional consequences;
• Duties that the parties are legally obligated to perform; and/or
• Duties that the parties must refrain from at risk of breaching the contract.

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