DRAFTING EFFECTIVE CONTRACTS: How to Revise, Edit, and Use Form Agreements

Author(s): Susan M. Chesler

Source: Business Law Today, Vol. 19, No. 2 (November/December 2009), pp. 34-37
Published by: American Bar Association
Stable URL: http://www.jstor.org/stable/23297349
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 Clearly and consistently
I set forththe parties'
rights and obligations

contract
of the

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 TrainfortheFuture

DRAFTING

EFFECTIVE

CONTRACTS

How to Revise, Edit, and Use Form Agreements

By Susan M. Chester

I firststarted teaching Drafting and Negotiating" at Sandra use any form or model agreement that

legal writing, my courses Day O'Connor College of Law at Ari is publicly available, either in print or
When focused on teaching first-year zona State University. The goal of my online, in any way that they deem use
law students to analyze, research, and course is to provide students with the ful. Across the classroom, smiles widen
write in the litigation context. I was opportunity to learn the basic princi and I hear sighs of relief. After all, how
a litigator before I started teaching, ples of contract drafting, interpretation, difficult can it be, they think, to edit a
so this made perfect sense to me. But and negotiation. My aim is to make form contract and tailor it to the facts
then I had the opportunity to teach a students proficient at drafting contracts of the assignment? But they quickly
contract drafting course while I was that effectuate their (fictional) clients' learn that it is not so easy after all. I
an adjunct professor at New York Law needs, and at using the drafting pro advise my students in that first class

School, and a light bulb went off. Not cess to anticipate, and hopefully avoid, that most form agreements are out

only do many law students not find potential legal disputes. But the truth dated, drafted using archaic language
themselves as practicing litigators after is that lawyers rarely, if ever, draft and legalese, incomplete, and often

3 law school, but even I, as a former liti contracts from scratch. So when I was inadequate, and are always generic in
3 gator, spent a lot of my time working designing my course, I asked myself their scope. Handing in an assignment
with contracts—reading them, inter how I was going to prepare my stu that closely resembles that form con

preting them, drafting them, and fil dents to enter the workforce with effec tract will not land my students a good

ing many motions relating to their tive drafting skills while recognizing grade.
meaning. It is now several years later, that they will almost always be starting My course focuses on much more
and I teach a course titled "Contract with an inadequate and poorly drafted than it also focuses on
— just "drafting";

O
H
form agreement. The result: I teach my planning, interpreting, and negotiating
5 Chester is an associate clinical professor students how to effectively revise, edit, contracts; it addresses the principles
J of law at Sandra Day O'Connor College and use form contracts. and theories behind effective drafting;
of Law, Arizona State University. Her On the first day of class, I announce and it teaches students about the role

e-mail address is susan.chesler@asu.edu. to my students that they are able to of transactional lawyers and how they

NOVEMBER/DECEMBER
2009 35 LAWTODAY
BUSINESS

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communicate with their clients. Yet the contained in most form contracts are The contract must clearly distinguish
aspect of the course that resonates with rarely adequate and they generally do between a party's mandatory legal duty
most students, and will likely be used not comply with the parties' intentions; subject to breach, and his or her privi

by them when they enter the work the remedy of the default provision is lege to perform.

force, is how to effectivelyuse a form usually termination of the contract and Finally, state conditions with the
contract. for many breaches, the nondefaulting word must; you should be able to sub

party still does not desire to terminate stitute "has to do X before Y will hap
Practical Guidelines the contractual relationship. pen" whenever you use the word must.

The following six practical guide Finally, consider the worse case sce The key distinction between a manda
lines that I provide to my students nario. Assume that the parties become tory duty and one that is conditional

will assist any law student or practic hostile toward each other, seeking to is that in the latter, the party's legal

ing lawyer in successfully revising a undermine the other party at every obligation to perform does not become

form contract, tailoring it, and turning opportunity. Will the contract pro mandatory unless and until the condi

it into a well-drafted, complete, and vide sufficient guidance to govern the tion is met. In other words, the par

effective contract that meets their cli relationship? Will it provide suffi ty's failure to perform that obligation
ent's needs. cient guidance to a court interpreting results in a breach only if and when
1. Think throughthe life of the con the contract or imposing remedies, if the condition has been met.

tract under various fact patterns. First, necessary? 3. Understand every provision of the
hypothesize performance. What will 2. Clearly and consistentlysetforth contract. One of the problems with

happen, moment by moment, if the the parties' rightsand obligations. In its using a form contract is that you were

parties comply with all of the terms most basic sense, a contract sets forth not the drafter of the document; thus,
in a timely manner? Does the contract the private law governing the parties' you may not understand every provi
contain all of the necessary "rules" and relationship. Therefore, it is vital that sion of the agreement, and not every
details to assist the parties in know it clearly and precisely sets forth the provision in the form is relevant to the

ing how to perform their duties? Most parties' contractual obligations and transaction at hand. I offer this guid
form contracts do not adequately set rights. It is also very important that ance to my students: when using a

forth the steps necessary for the parties these duties and rights are consistently form agreement, never leave in a pro

ARE THE CONSEQUENCES OF FAILURE TO PERFORM STATED IN THE AGREEMENT?

to understand what needs to be done drafted throughout the contract. While vision because you do not understand

to carry out their contractual obliga there are several acceptable choices its purpose (do not assume it must be

tions. Every contract should clearly of language to use when drafting, the important or relevant), and never take

answer these six questions: (1) who is key is to be consistent throughout the out a provision simply because you do

obligated to perform; (2) what is the agreement. I teach my students that not understand its purpose. You must

obligation; (3) by when must the obli whenever a party has a mandatory review each provision until you under

gation be performed; (4) where will the contractual obligation, state that obli stand it completely. Only then can you

performance take place; (5) how is the gation with the word shall and never decide whether to include, omit, or

obligation to be performed; and (6) if use the word shall to have any other modify that provision.
performance involves money or goods, meaning. Thus, you should be able to 4. Use recitals and definitionsto reflect
how much? substitute "has the duty to" whenever the parties' specific transaction. Although
Second, envision nonperformance you use the word shall. Since a manda not part of the operative terms of the

and default. Ask yourself what if one tory contractual obligation is synony contract, recitals can effectively be

or both parties fail to perform all or mous with a legal duty, a party's failure used to state the parties' intentions or

part of the contract—are the conse to perform that duty rises to the level to provide relevant background infor

quences of failure to perform stated in of a breach and may result in an award mation. Since the contract may eventu

the agreement and closely linked to of damages. ally require interpretation by a court,
the performance required? I encour On the other hand, whenever a it should include within its four cor
age my students to get into the habit party does not undertake a legal obli ners all of the information that may
of resolving these issues at the draft gation, but is entitled to exercise a be useful to explain the parties' con

ing stage, rather than waiting for the right or privilege under the contract, tractual relationship, any past history,

parties to have a dispute. The contract state the authorization with the word and the parties' intentions that may
should protect your client by stat may; you should be able to substi not be clear from the operative terms

ing a remedy for the potential default tute "is authorized to" or "is entitled of the contract itself. For example,
of each obligation. Default provisions to" whenever you use the word may. while courts are becoming increasingly

BUSINESS
LAWTODAY 36 NOVEMBER/DECEMBER
2009

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hostile to contracts in which parties change your meaning. In an effort to those headings are read by the parties,
surrender fundamental rights, such as teach them to draft contracts with the their counsel, and possibly a court;

access to the court system, if the par goal of avoiding litigation, ambiguity is therefore, make them work. Keep sen

ties truly wish to waive their rights to not tolerated. tences short, where possible, or use

a jury trial, they may do so. In these 5. Use plain language. Contracts tabulation for clarity. Be sure to con

contracts, the waiver should be draft should be drafted with clarity and nect modifying words to what they
ed so that it is clear and conspicuous, should be easy to read and understand modify, i.e., in "the new house and
and the recitals should include some by legal and lay audiences alike. Thus, car" phrase, is the car new too? Final

language regarding the parties' intent omit legal jargon and unnecessary ly, use proper punctuation to avoid

to waive their legal rights to a jury words, and eliminate wordy phrases costly misinterpretation of the con

trial. However, drafters must be care from form contracts. I tell my students tract. For example, one legal dispute
ful not to include any representations to think like an attorney, but to try not resulted in a finding that the contract

in the recitals that may have legal sig to sound like one. Since the words of could be terminated at any time with

nificance because the recitals are not the document will govern the parties' proper notice, contrary to one party's

part of the body of the agreement and, relationship, rights, and legal duties, understanding that the contract had

therefore, there may not be any legal they should clearly communicate their an initial five-year term. This ruling
remedies if the representations are, in meaning to the parties themselves, was based solely on the (misplace
fact, false. and not only to their counsel. As most ment of a single comma, and saved

Additionally, the use of definitions practicing lawyers are aware, a major the other party to the agreement an

enables the drafter to tailor the mean ity of available form contracts fail to estimated $1 million by enabling it to
ings of certain terms used in the con adhere to this advice. They are strewn terminate the contract within the first

tract to the subject transaction, and with "whereas," "witnesseth," and "to five years of the contract term.

also can prevent inadvertent changes wit"—all of which detract from the
* * *
of language. Generally, if the word readability and comprehension of the
or phrase as used in the contract is contract. It is also important to check

intended to vary in any way from the to see if your jurisdiction has a plain As an idealistic professor, my goal
standard dictionary definition of that language law, mandating contracts would be to convince each of my stu

word or phrase, or if the word or to be written in a clear and coherent dents to throw out the antiquated

phrase does not have a standard dic manner using words with common form contracts and start drafting from

tionary definition, it should be defined meanings; in fact, in some states, plain scratch using effective drafting prin
within the contract. There are three language laws dictate the number of ciples and plain language. But as a for
basic types of definitions: (1) precise syllables in the words and the number mer practicing lawyer, I fully under
definitions, drafted using the word of words in each paragraph of the con stand the utility, and benefit, of rely
means', (2) enlarging definitions, draft tract. Failure to follow the application ing on existing form and model agree
ed using the phrase "including but not of plain language laws may impact the ments. I can only hope that 1 achieve

limited to" after the definition, followed enforceability of the contract. both goals by teaching my students

by illustrative examples; and (3) limit 6. Use proper grammar, a clear writ how to effectively revise, edit, and use

ing definitions, drafted using the phrase ing style, and logical organization. Con form contracts.

"but does not include" after the defini tracts generally describe events that Thinking back to when I first
tion, followed by the limitations of the will take place in the future, but it entered the legal profession, I wish
definition. An example of each type of is a continually speaking document that law school had provided me with
definition follows: (1) "Land" means and should be drafted in the present an arsenal of the skills that I would

the property located at 123 Smith Lane; tense. Draft using the active voice. Ask need to practice law effectively. Fortu

(2) "Land" means the property located who is obligated to do something or nately, under the ABA's Standard 302,
at 123 Smith Lane, including but not to refrain from doing something, and law schools are now required to pro

limited to the residential house, sepa make the subject do the action. When vide their students with substantial

rate garage, and vacant barn; or (3) drafters use the active voice, the iden instruction in professional skills neces
"Land" means the property located at tity of the actor is clear. This is vital so sary for effective participation in the
123 Smith Lane, but does not include that the contract clearly and unequivo legal profession, such as contract draft

the vacant barn. cally expresses the parties' legal duties. ing skills. As a result, more students at

Throughout the semester, I remind In addition, draft useful headings more schools are now able to take

my students numerous times of the and organize the terms around those practical courses like the one that I

golden rule of contract drafting: never headings. Even if your form contract offer at ASU. Hopefully, with a new
change your language unless you wish contains a boilerplate provision stat generation of lawyers trained in draft

to change your meaning, and always ing that the headings should not have ing, the antiquated form contracts will

change your language if you wish to any operative meaning, the fact is that be a thing of the past. 0B

NOVEMBER/DECEMBER
2009 37 BUSINESS
LAWTODAY

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