You should first know your client, before you start drafting a contract.
Your client is the most important person, and it is your duty to do your best for your client. Your client can be an individual or a company. They may be illiterate or highly educated. They may be financially well off or very poor. They may be an organisation, you may be working for.
Irrespective of your client’s background, your primary duty is to draft a contract that adequately protects legal and commercial interests of your client. So, it is imperative that you first have to understand their business requirements clearly even before you think the word “contract”.
First and foremost, you must understand about your client as much you can.
If your client is an organization and if you are part of this organization, you may already know a lot about your client’s needs. You are expected to understand the organization structure and may know the actual decision making authorities. When you are starting your career as an in-house counsel, you may only be reporting to your immediate boss, who may or may not have a legal background. In both cases, however, you will be asked to draft the contract within pre-defined commercial boundaries (e.g., contract should be one-sided and must be in favour of your organization’s commercial interest). You should clearly understand the scope, know the parties involved, have clear instructions about the commercial terms, understand the technical and transaction related details, etc. You may get special instructions for commercial and technical aspects of the transaction. If your immediate boss is a business person, your responsibility as a contract drafter is much more.
As a thumb of rule, if the counter-party is a customer you are expected to focus more on the rights that your organization needs to have. But, if the counter-party is a supplier/ service provider, you are expected to focus more on the obligations that they must fulfil.
As an example, if counter-party is a customer, they may demand that your organization – if it is a supplier of goods – to deliver the goods on time and of certain specifications, and that the warranties related to goods are in their favour. And, if your organization is a service provider, they will ask your organization to meet certain service level guarantees.
Here you will have to do a balancing exercise, and may have to heavily negotiate indemnity and warranty clauses. In such cases, the important clauses that you must focus on will include payment terms, scope of supply/service, warranty disclaimers, force majeure, liquidated damages, etc.
When the tables turn, i.e., when your organization is a customer, you will have to change your approach in the opposite direction, and must focus on getting most from the supplier/ service provider.
If you are not a part of your client’s organization, i.e., when you are working as an independent lawyer or as a part of law firm, your task will become more challenging. Here, you are expected to work within strict mandate of your client’s requirements, and may have to explain the clauses in detail. Such clients expect and deserve to get all they can for each penny of their fees. Your must focus and clearly understand the client’s requirements, the underlying transaction and help your client get the outcome they desire. You may have to deal with your client’s in-house legal team and business team. You should strongly focus on building a strong one on one relation with them and avoid any kind of friction. Ultimately, they are the decision makers not only for the immediate transaction but also for any future work they will give or refer to you.
If your client is an individual, you may be in the tightest shoes that a contract drafter can wear. An individual client may have many biases and may not be comfortable giving true or complete picture. Such clients may have unusual demands like heavy use of verbose and legally archaic language, inclusion of unfair contract terms, etc. You may have difficulty in making them understand that such clauses may not stand legal test, and end up losing your client. So, be very careful in your choice of words in dealing with such clients.
To summarise, always get a clear picture about your client’s requirements, by asking all kinds of questions, and always give priority to their commercial and legal interest.
So, if you are ready, let’s move to next lesson.
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