What to do when drafting a contract

Drafting Contracts: Dos and Don’ts

author-thumbnail Grover Collins

BY Grover Collins

Founder & Managing Member

Contracts are a vital part of any business agreement. From initial startup to growth and development, contracts can clarify business arrangements and partnerships, protecting your business interests. If you’re in the midst of drafting your terms, it’s important to know what to do and not to do, to avoid potential errors and future disputes. Contracts are legally binding documents that ensure both parties understand their responsibilities and are protected from potential disputes. Unfortunately, many people overlook the importance of contracts, which can lead to costly mistakes. In this blog post, we will discuss some do’s and don’ts when it comes to contracts to help you avoid making costly mistakes.

Drafting Contract Do’s:

1. Get it in writing:

When drafting agreements, make sure you include all the essential elements that are necessary for the contract to be legally enforceable. These elements include names and contact information of both parties, the subject matter of the contract, the expectations and obligations of each party, and any terms or conditions of the agreement. It is also important to include a clear termination clause so that either party can end the agreement at any time.

By taking the time to draft a detailed and comprehensive agreement, both parties can have peace of mind knowing that their interests are protected. Doing this will help ensure that your contract is legally binding and enforceable should there be any misunderstandings or disputes in the future.

  • Use plain language and avoid formal and technical language.
  • Include the date at the beginning of the contract and number each paragraph to make it easier for reference.
  • Apply logical headings to each clause for easier identification of particular provisions.
  • Ensure all agreements and possible contingencies are documented. Leave nothing vague.
  • Consider the placement of punctuation marks, which can change the meaning of a sentence

2. Know what you’re signing:

Before you sign a contract, make sure you know what it says. Read the entire document carefully, and don’t be afraid to ask questions if there are any parts that are unclear. Make sure that all the clauses, terms, and conditions make sense to you, and that the language used is precise and unambiguous. Take your time to make sure that the contract does not contain any hidden obligations or risks.

If the other party insists that you sign the contract without making changes, then you may want to seek legal advice. An experienced lawyer can help you understand the implications of signing a binding contract. They can also make sure that the other party is not taking advantage of you and that the terms are fair. Additionally, they can explain any clauses or technical language in the document so that you fully understand your rights and responsibilities before signing.

  • Retain a copy for your records.
  • Have all the parties initial every page and include notarization.

3. Consider the other party’s interests

When entering into any type of contract, it’s essential to remember that both parties have interests in the agreement. While you might be focused on your own interests and needs, it’s important to make sure that the other party is also taken into account. When preparing to negotiate a contract, make sure to consider the interests of both parties, as this will lead to an agreement that is fair for everyone involved.

Firstly, take some time to think about what the other party would want out of the agreement. It’s important to consider their needs and make sure that they are addressed in the contract. This could involve anything from ensuring a fair payment for services rendered to providing clear deadlines for the delivery of services.

It’s also important to be aware of the legal protections that apply to each party, such as rights to termination, warranties, and dispute resolution. Make sure that any potential areas of dispute are covered in the contract, including how any disputes will be dealt with.

By making sure that both parties’ interests are taken into account when drafting a contract, you can help ensure that the agreement is equitable and fair for everyone involved. Negotiating a contract can be complex and time-consuming, but it’s worth investing the time to get it right.

  • Have all the parties initial every page and include notarization.
  • Retain a copy for your records.

4. Get advice from a professional

When entering into a contract, it’s important to get advice from a professional to make sure you understand what you’re signing up for. A lawyer or other professional can help you to understand the legal language and implications of the contract, as well as any potential risks involved in signing it. They can also help you negotiate better terms, such as more favorable clauses or more secure methods of payment.

Having an experienced professional on your side when entering into a contract can be invaluable, especially if things go wrong down the line. In addition to their expertise, they can provide impartial advice and help guide you through any issues or disputes. If you’re entering into a complex or high-value agreement, it’s particularly important to get professional advice.

When seeking advice from a professional, make sure you choose someone who is experienced in the specific area you need help with. Ask for references and find out about their background and qualifications. Make sure you ask questions and check out their credentials before hiring them.

Having a professional on your side when negotiating or entering into a contract can be hugely beneficial. Their expertise and experience can help ensure that the agreement is fair and mutually beneficial and that any potential risks are minimized.

  • Consider hiring an attorney.
  • Discuss questions or concerns with an experienced business law attorney.
  • Allow your attorney to review and advise you on the contract.

5. Make sure you’re both on the same page (the parties to the contract are on the same page)

No matter how complex or simple a contract may be, it’s important that both parties involved understand all the terms and conditions. Before signing a contract, it’s essential to ensure that you and the other party are on the same page when it comes to understanding the agreement.

It’s important to remember that any misunderstandings can lead to legal disputes in the future, so it’s best to go over the contract multiple times until both sides are comfortable. Have each party read the contract and ensure that they understand and agree with all of its terms and conditions. To avoid confusion, ask any questions that you have and make sure all parties have a clear understanding before moving forward.

It’s also a good idea to have a conversation with the other party about any potential changes or clarifications to the contract before you sign. This will help prevent any miscommunications and make sure both parties are fully aware of the terms of the agreement. Additionally, be sure to have both parties sign a copy of the contract so that there is no dispute about who agreed to what.

By taking the time to make sure both parties understand and agree to the terms of a contract, you can avoid costly mistakes and protect yourself from legal complications in the future.

  • Sign the contract in colored ink (not black) so that the original copy is distinguishable.
  • Have all the parties initial every page and include notarization.
  • Allow the other party to have an attorney review.
  • Retain a copy for your records.

6. Have a plan B

It’s important to have a backup plan in case things don’t go as expected when entering into a contract. Having a plan B in place gives you and the other party the peace of mind that there will be an agreed-upon resolution should anything go wrong during the course of the contract.

It is best to discuss potential issues and how they could be addressed before signing the agreement. This ensures that both parties are in agreement about the plan of action if any issues arise. This can include establishing a timeline for addressing any disagreements, setting expectations for resolving conflict, and more. Additionally, if appropriate, consider including language in the agreement that outlines what will happen if either party does not comply with their obligations under the contract.

Having a plan B also allows both parties to agree to terms that could provide an alternate outcome if an issue occurs. For example, if one party fails to deliver on their end of the bargain, the other party might have the option to void or suspend the contract or seek compensation instead of termination.

Overall, it is important to have a plan B in place when entering into a contract so that both parties are prepared for potential problems down the line. Doing so will give you the security of knowing that all parties involved understand the consequences of breaching the agreement and can act accordingly should any issues arise.

Drafting Contract Don’ts

Please don’t do the items listed below. If there is a dispute – it will almost certainly be bad for you.

  • Use form contracts. Every contract should be unique and suit your circumstances and goals.
  • Use long sentences. Break down each section into easily digestible portions and get rid of any meaningless text.
  • Use “shall” unless your intention is to create a mandatory duty or an obligation.
  • Be repetitive, unless it’s necessary. Refer back to a previous provision by number or heading instead of repeating it verbatim.
  • Assume all parties will understand terms in the same manner. If there is doubt, include the definitions.
  • Accept oral explanations or agree to modifications without getting them down on paper.
  • Act in accordance with the terms of the contract until it is finalized.

Want to read More?

→    BLOG: Eminent Domain in Tennessee: the Good, the Bad, and the Ugly

→    BLOG: Get to Know ChatGPT: Your Go-To-Ai Chatbot for Business

→    BLOG: Business is Booming in Nashville!

→    BLOG: Non-Compete Agreements & Clauses


→    If you or your business is entering into a contractual agreement, it is best to consult with an experienced attorney. A word out of place, a forgotten clause or vague wording can cost you or your business hard-earned money.

Legal Disclaimer

All information provided on this website is for general information and attorney advertising purposes only and not intended as legal advice. Persons reading information found on this website should not act upon this information without seeking the advice of legal counsel. Said information on this website is not intended to create an attorney-client relationship. Receiving and/or viewing said information does not constitute an attorney-client relationship. Prior to acting on any legal information found on this website or otherwise, Collins Legal advises you to seek the advice of legal counsel.