Business Contracts

 

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Introduction

A contract involves given formalities in its formation. A good contract is usually presented in writing where the involved parties put down the agreements. There are many skills used in business management. Negotiation is one of the skills used in drafting a good business contract. Negotiation is viewed as a normal and natural process though it can have many challenges and rewards. Negotiation involves bargaining which is done in preparation of the processes involved in the agreement or contract. Negotiation involves settling all the differences and reaching an agreement which favors the parties involved. Written contracts are preferred as opposed to the oral ones.

Practical guidelines on drafting business contracts

Use of the correct grammar, plain writing style and reasonable organization

According to (Miller, et al, 2008 p.45) contracts should be made clear and should be easily understandable to the parties involved since they are used for future reference. The contract should therefore be drafted in the format of present tense. The contract should enhance the legal voice and should be therefore made official in order to enhance reasonable organization. Draft contracts should use clear headings as a way of enhancing clarity. The headings should be clearly read by the parties involved, the lawyers involved and the in the courts. The sentences involved in drafting the contracts should be short and correct grammatically. According to (Miller, et al, 2008 p.45) contracts should maintain use of correct punctuations in order to avoid misunderstanding, miscommunication and misinterpretation.

Maintaining plain and clear language

Contracts should be easily read by both parties involved and also the legal representatives involved. They should make sure that the grammar used is plain such that even lay individuals can comprehend (Bacal, 1999 p.223). Law jargons and other hard vocabulary should not be part of the contracts and should be avoided. The contract should favor all the parties involved inclusive of counsels present. Contracts should be written using the common and general language which is easily understandable by all as a way of avoiding misunderstandings and misinterpretation (Bacal, 1999 p.223). The paragraphs used in the contract should always remain short, precise and clear. According to failure to use the plain language as a skill may cause negative consequences according to legal terms.

Using definitions to reflect the people’s necessary transaction

The correct definition should be necessary as a way of providing the correct background information from the parties involved (Bacal, 1999 p.223). The contract must be presented in a court of law and thus it should bear the necessary information on the relationship of the parties and their histories which may not be included in the terms of the contract. The rights of the parties involved should not be violated in any manner and thus they should be outlined in the courts (Bacal, 1999 p.223). Recitals should not be included when drafting the contact since they are less important as compared to the parties involved and their information is also very important. Definitions explain and elaborate well the meanings of words and sentences used in the given written contract. They are very necessary and should always be present.

Understanding every provision in the contract

The drafters should always understand the provision of the agreement even though it might seem less important. The provision in the contract should be easily understood since failure to do so contribute to miscommunication (Bacal, 1999 p.223). The drafter should not include a provision which is not easily understandable since it might contribute to misinterpretations later on. The rights of parties involved should be always set forward.

Effects of drafting errors on the parties’ contractual agreement

The terms of a given contract and agreement should be correct and clear as they are presented in a law court. The contracts are formed between two or more parties and should the terms should be clear and well followed. The terms should be very clear and well stipulated in the stated contract. The contract should maintain common understandable language in order to avoid future complications (Boundy, 2010 p.89). The contracts and the terms involved maintains good business relations since all the parties involve do in accordance to the terms of the contract. The drafting errors should be avoided since they cause misinterpretations and misunderstanding between the parties involved and the representative counsel. It is important to ensure terms used in drafting the contract are legally binding to avoid disadvantaging one party at the expense of the other (Boundy, 2010 p.89). The errors in drafting the contracts implies that the parties involved were not keen which results to misunderstandings and future conflicts which should be avoided earlier on.

It is evident that when two parties enter a contract with identified errors the contract can not be termed as a credible one. The errors involved in drafting the contract are an issue in the laws and should always be avoided. Errors are categorized as errors of law and error of fact. The errors can be easily avoided when writing is done accurate as well as the oral terms made clear. The errors are mostly unintentional from given wrong terms (Fontaine, 2009 p.76). Errors of law mostly arise when the law requirements and terms are not correctly followed. Errors of facts occur when the parties mistake the characteristics and what the law requires. The errors in drafting the contracts have a negative impact on the parties involved and the business relation.

Errors may influence decisions made by the involved parties hence compromising on its relevance. There is possibility that errors have capability of greatly affecting the common reliability of contractual agreements between the parties (Solnik, et al 2003 p.109). If this case arises, one or both parties tend not to honor the contact terms which leads to breaking up in partnership businesses.   Errors are very costly hence there is need for business partners to avoid them when entering into a contract.

Conclusion

From the above discussion, it is true to conclude that there is likelihood that errors create cases of money schemes which may lead to collapse of the partnership business. Drafting of these mistakes are costly and has many negative consequences to the business partners and the business relations which should be avoided. Partners should therefore avoid those errors.

 

 

 

 

 

 

 

References

BACAL, R. (1999). Performance management. New York, McGraw-Hill.

BOUNDY, C. (2010). Business contracts handbook. Farnham, Surrey, England, Gower Pub.

Fontaine, M., & De Ly, F. 2009. Drafting international contracts: an analysis of contract   clauses. Leiden, Martinus Nijhoff Pub. 55

Miller, R. L., & Jentz, G. A. 2008. Business law today: the essentials : text & summarized cases--e-commerce, legal, ethical, and international environment. Australia, Thomson/South-Western West.

Solnik, R., & Thompson, M.-A. 2003. Drafting wills in Ontario: a lawyer's practical guide. Toronto, CCH Canadian. 28