During a training contract, you may well be required to draft, amend and/or comment on particular clauses from a contract. With this in mind, here are some tips to help with your legal drafting.
Clarity
If parties enter into a binding agreement on the basis of wording that does not actually reflect their intentions, the consequences could be incredibly costly. It is therefore essential to be as precise as possible and leave no room for ambiguity as to the meaning of phrases, clauses and concepts.
Always consider: What must be done? Who is responsible for taking this action? What is the time frame/deadline? and Where should the relevant obligation(s) take place?
Note that certain words may have different meanings in the context of contractual clauses (e.g. meanings attributed to certain phrases by the courts). If in doubt, check case law and legal commentary to assess whether a different meaning has been attributed to a particular phrase that you intend on using. Certain clauses may also be invalid in some contexts, such as clauses that attempt to exclude liability for fraud or impose penalties that are overly harsh.
In general:
Your starting point
Note that a firm’s house style rules often govern the drafting and formatting of contractual clauses, so where applicable, make sure you adhere to these. To that end, many City firms have a database of standard form documents (i.e. template documents) and precedent documents (i.e. documents that were used for previous legal matters) that can be used as the basis for your drafting. These documents typically include “boilerplate” clauses, which you may need to adapt to suit your client’s needs and reflect the commercial agreement reached by the parties.
Boilerplate clauses: these are commonly used standard clauses that appear in a majority of contracts. Examples include: entire agreement clauses, force majeure clauses, assignment clauses, variation clauses and governing law and jurisdiction clauses. There is more detail on boilerplate clauses in the General boilerplate clauses section of the Core Commercial Law Principles chapter later in this handbook.
John Trimbos: often, you will be required to fill in certain gaps within boilerplate clauses (e.g. addresses for service of notices) or to choose from multiple options (e.g. to decide which disputes resolution wording to use). Don’t forget to customise these clauses when necessary; searching the document for square brackets – which usually signify where further input is required – might help you to identify clauses that require customisation, but you can’t always rely on this!
Execution clauses
If a contract is not executed properly, it may not be binding (subject to the common law rule of estoppel). Certain types of contracts must be executed in different ways in order to properly bind the parties.
The way in which a document must be “executed” (i.e. made binding) will depend on a number of factors. For example, you will usually need to consider:
This will all determine the wording that needs to be used in signature blocks, as well as whether witness blocks will need to be included.
Simple contracts v deeds
You will likely deal with both simple contracts and deeds during a training contract and it’s essential that you understand when it is appropriate to use one over the other. To briefly summarise, a deed is a specific type of contract that must be used for certain types of arrangements, including transfers of land and the granting of powers of attorney. The execution requirements for deeds are more onerous than those for simple contracts. Unlike simple contracts, deeds don’t require the transfer of consideration (so deeds should be used to document binding agreements where consideration is not flowing between all the parties), and deeds also have longer limitation periods for breach of contract claims (12 years rather than 6 years).
It is also essential that you understand the respective legal requirements for executing simple contracts and deeds. Firms may have their own requirements for execution, including standard form/house style wording, so be sure to check your firm’s in-house standard form documents and any related style guides when working on execution clauses.
In addition, clients may have internal requirements for who should sign documents and how documents should be signed (for example, some companies may stipulate that larger contracts should always be signed “by” the company, and under the hand of at least two directors), so check this as well.
It is important to get the execution section right, otherwise the agreement may not be valid or binding.
Our Mergers and acquisitions course gives a detailed insight into key transaction documents, including engagement letters, non-disclosure agreements, heads of terms, sale and purchase agreements, shareholders' agreements and loan agreements. For these documents, we highlight the key clauses and consider common negotiation points. We also include a lesson setting out execution requirements for both deeds and simple contracts.
" } }