A poorly drafted contract or agreement can create confusion, and may lead to litigation, or even a negligence claim against the drafter. Drafting clear and concise terms is a skill that many new lawyers struggle with as it is a very different skill to those that are typically fostered in law school. Much of the work of a lawyer in drafting contracts is to anticipate, or at least be aware of, common errors that can lead to litigation. For new lawyers, it is imperative to approach drafting a contract or agreement, such as a purchase contract or cohabitation agreement, while mindful of all possible outcomes of the contract, including the risk of litigation.
This guide will highlight the most common errors in drafting. Some of these errors are more common to specific areas of law so be mindful of the legal principles that apply to your practice.
It is important to ensure that you have all the information you need for a well-formed document that meets your client's needs. This allows you to ensure that the contract or agreement has been formed or will be binding upon execution. After a fulsome interview, you should be able to answer the following questions:
When you can answer the above questions, you are in a position to start drafting.
This is one of the most important points for many new lawyers to appreciate. Drafting contracts and agreements requires highly technical and precise writing skills. Unlike writing in other contexts, every single word in an agreement or contract must matter and fit the goal of the term. There is contractual litigation, such as in the interpretation of a will, over commas, phrases, specific words, and semi-colons.
For example, in the case of Vopicka v Vopicka Estate, 2017 BCSC 2197, the court was asked to interpret a gift over clause in a will. Much like other will interpretation cases, use of per stirpes or per capita can dramatically change the distribution of an estate, and Vopicka uses particular phrasing that invokes this needed interpretation,
“… PROVIDED THAT if any of my sons or daughters shall then be dead, the legacy to which the said deceased son or daughter would have otherwise been entitled shall be divided equally among the surviving sons and daughters.”
In making its determination, the court relied on the form of drafting creating an exception by capitalising “PROVIDED THAT”, and the use “the” rather than “my” when referring to “surviving sons and daughters” combined with an ordinary, grammatical reading of the clause to determine the deceased intended her grandchildren to receive their parents share, if the parent predeceased the will-maker.
As a drafter, you want to ensure that it is clear to a reader exactly what the parties’ intentions are. Proper grammar and punctuation lead to clarity of intention, which is an essential component of a sound contract or agreement.
When reading older contracts or agreements, much of the language is archaic and, at times, convoluted. Using modern and simple language allows readers to understand the intention of the parties. This includes avoiding passive voice, using modern words, and streamlining provisions. The accompanying contract example has simplified phrases highlighted in green. It may be that you have to use highly technical terms depending on the subject matter, but the key elements of any term should follow a simple formula:
Party 1 will pay Rent to Party 2 not later than May 1, 2024.
Party 1 – The party doing something. Here we see that Party 1 will pay Rent.
Party 2 – The party receiving or having something done to them by Party 1 by a certain point in time, if needed.
Using a definition section in the agreement or contract allows a reader to clearly follow the integral terms of art, assets, parties, locations, or whatever will be a commonly recurring point of the contract or agreement throughout the document. For example, if the subject of the contract of purchase is about a series of items, you can define the group of items once they have been listed in the definition sections:
Once you have defined a term, ensure you use it consistently.
If you can avoid cross-referencing paragraphs or even other documents within the contract or agreement, that is preferred. It may be that you cannot avoid a cross-reference. However, cross-references are at best annoying but necessary, and at worst confusing, potentially irrelevant, and potentially complicating to the contract or agreement. Such confusion can breed difficulty in understanding the rights and responsibilities of the parties.
Unless you have received specific instructions to do so, do not remove or edit boilerplate terms from a contract or agreement. This is because courts will interpret contracts, particularly standard form contracts, in light of the prevailing law: British Columbia (Minister of Technology Innovation and Citizens’ Services) v Columbus Real Estate Inc., 2016 BCCA 283, at para 50. If a boilerplate clause is included, there is typically a reason for such inclusion, and removing the term (e.g. a clause indicating all parties have had the opportunity to obtain independent legal advice) implies an intention contrary to established law, leading to uncertainty, and potential litigation.
That said, when using precedents, you must ensure that any boilerplate included is relevant to your client’s needs. You must do a review of all terms with your client to ensure accuracy and relevance. It is your responsibility to ensure the contract or agreement reflects the intentions of the parties.
The above practice tips lead to this last point – avoiding the need for court interpretation. While the courts can read into an agreement or contract, using clear and precise drafting avoids the need for interpretation of implied terms or the intentions of the parties. When interviewing clients for agreement or contractual instructions, or reviewing mediation or settlement minutes, you must ensure that you understand the client’s intentions for every single term. Avoid any ambiguity in the terms to avoid the need to have a court read in an implied term. This front-loading during drafting can help alleviate the need for judicial interpretation and increased costs for your client.
The documents shown below include errors for educational purposes. Be sure to click on the comments in the PDF for explanations about which of these statements can and can not be used in this type of document, and why.