Contract Drafting: Checklist for Structuring Terms and Clauses, Study notes of Law

Download Contract Drafting: Checklist for Structuring Terms and Clauses and more Study notes Law in PDF only on Docsity! 1 Contract Drafting Structure Checklist 1. Basic structure of a contract a. Identify the parties i. Verify corporate entity name in state records b. Term/termination i. Term=Duration of commercial agreement 1. Time based; project based; relationship based ii. Termination 1. For cause 2. Right and procedure to terminate early 3. Cure 4. Rights and obligations after termination. c. Recitals i. State purpose of the contract ii. Avoid overly detailed or constructing recitals iii. Ensure recitals consistent with body of contract d. Definitions i. Clarify the understanding of the parties ii. Undefined terms can create ambiguity iii. Can restrict or expand a dictionary definition iv. Can explain terms specific to an industry or deal 2 e. Terms and Conditions i. Basic rights and obligations of parties ii. Deal specific iii. Price and payment iv. Conditions – necessary for performance of obligations 1. Different legal import than covenants 2. Draft to avoid confusion between covenants and conditions f. Representations, Warranties and Indemnification i. Risk allocation mechanism ii. Distribute risk among the parties in predictable way iii. Parties make standard reps & warranties to each other about 1. Parties 2. Terms of contract 3. Subject of contract iv. Basis for claim if a party makes misrepresentations or breaches warranty 1. Can also disclaim warranties arising by operation of law (sometimes) v. Avoid overly detailed warranties. Can become basis for litigation. vi. Breaches of warranties and representation give rise to different damages 1. Carefully distinguish in drafting vii. Indemnification is express risk shifting from one party to another for anticipated costs- usually third party claims 1. Duty to defend (attorney’s fees & court costs) 2. Duty to indemnify (pay for judgment against the other party) 3. Scope- broad, intermediate, pro-rata