Learning how to draft a contract is a most essential skill that a lawyer should have in his briefcase.
Whether you are an in-house counsel or an associate in a law firm, chances are that contracts form a major part of your work profile. In some of the work profiles, all you will end up doing is drafting, vetting, negotiating and executing contracts day in and day out. ‘Contract Specialist’ is a real job title in many in-house departments. They are the super experts of contracts for their companies and they manage the entire contract lifecycle for their companies. Do you want a job in such a role?
Or think about the glamorous sounding M&A and Project Finance teams in a law firm. What do they do exactly? They draft contracts for their clients whereby one company buys share of another company and a company raised finance for their projects through loans and such structuring from financial institutions. They are all about contracts. Yes, those headline grabbing ‘deals’ happening in the corporate inc are all based on contracts and nothing else.
In case you are a litigating lawyer, all your disputes will usually arise out of contracts and interpreting them in the favour of the client will be your ‘bread and butter’. Unless you know the nitty gritties of contract drafting, you will find it difficult to successfully deal with each and every issue arising out of contracts.
Are you still not convinced that you should learn how to draft a contract? Are you wondering why you need to, especially there are templates galore on the web?
Here are 5 reasons to egg you towards learning how to draft contracts from scratch.
1. What you learnt in law school is not enough
Believe me when I say that reading the commentary on 238 sections of the Indian Contract Act, 1872 or studying 300+ judgment in two semesters of contract law classes will not help you when you are handed a contract to vet, or asked to draft one from scratch in your workplace. Learning to apply that knowledge in the form of a well-drafted contract is a skill which you will have to learn yourself since what you learn in your law school is far removed from what you need to know to handle this job well.
Not belittling what all we learn at law school, the practical application of law of contracts is not one of them. In your professional life, it will not matter if you do not remember the facts of ‘Carbolic Smoke Ball’ case (although you should). It will only matter whether your client’s interests are protected or not.
2. Effective negotiation requires you to know the ‘why’
A contract is entered between two parties, so it will always involve negotiation with another party to bring them onto the same page as your client. Drafting a beautiful contract in favour of your client is easy, but to push it through with the other party is not. On a negotiating table, if you cannot explain why your client should not give the other party indemnity and only receive one, or why there is a lock-in period, you might end up giving up all the favourable clauses to the other side. Unless you draft a contract yourself, or at the very least, are familiar with the workings of all the clauses, you will most certainly fail this test. The only way to ace the ‘negotiation’ game is, as a first step, to learn how to draft a contract.
3. You cannot always depend on templates
Every workplace usually has templates in place, which means that you would start working on an available draft from day one, just replacing key facts and never applying you mind as to why the clauses say what they say. The internet, too, is replete with all sorts of templates. Then why do you need to work extra hard to learn drafting of contract?
There will come a day, when you won’t find a particular template and would need to draft a contract yourself. By that time, you might be so accustomed to taking the easy way out that this simple task will feel burdensome. Or worse, someone might find a glaring mistake in your draft which you got from the internet and you won’t be able to explain it. Why don’t we learn this basic skill of drafting contracts and save us some tears in the future? Use all the templates in the world, but with the confidence that comes from knowing how to draft a contract yourself.
4. A contract is tested when a dispute arises
Everyone knows that once the contract is signed, no one opens the document again. The client or its Finance, Operations and other Business teams start the work without giving the contract any further thought. It is only when an issue arises or one party wants to terminate or enforce one or more clauses of the contract, that you, as a lawyer, will be called upon. If the interpretation turns out such that its not helping the client at all, then all the efforts at the time of drafting and negotiation of the contract will have come to naught. No wonder, it is known that the best way to avoid any contractual dispute is to draft an airtight contract.
5. One skill to set yourself apart
In this highly competitive professional field, some of your peers may be very good with research skills, some may have the gift of the gab, some may be great with people, some are very diligent and sincere, and some may be close to the Boss. How are you going to set yourself apart? What skills will you possess which will make you ‘known’ as a good lawyer? What will help you to build your reputation in the professional arena? Knowing how to draft a good contract, negotiate it effectively and identify the risk while vetting a contract are skills which can be easily learnt and applied by you.
In this website, I will draw upon my own experience and help you learn the basic and the most important skill of drafting a contract. Hope you will like the series and benefit out of it.
Here is an article on signs of a well-drafted contract
Here is another one on points to note before drafting a contract.
Apart from reading this website (which is free), here are some books you can get for further studying.
- A Practical Guide to Drafting Commercial Contracts (Amazon link here): Best read for Indian law students
- Drafting and Negotiating Commercial Contracts (Amazon link here): Very pricey but a one-stop-shop of everything related to commercial contracts
- Contract Drafting and Negotiation (Amazon link here): Great for entrepreneurs and business professionals
- Drafting Corporate and Commercial Agreements (Amazon link here): Good for law firm associates
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Good article. simple language.