Five Simple Rules to Write Better Contracts

Writing a contract is easy when you follow these five simple rules.

1. Use “Shall” to Create Obligations

An obligation is something a party must do. You should use “shall” to create obligations. (Obligations also create “rights” on the other side. In this example, Bob has a right to expect Gene to perform.)

Example: Gene shall work at Bob’s restaurant on Saturday from 3pm until 11pm.

2. Use “May” to Create Discretionary Authority

Discretionary authority gives a party the choice of whether or not to do something.

Example: Gene may terminate his employment at anytime.

3. Use “If/Then” to Create Conditional Statements

Conditional statements require something to happen before something else can, or will be required to, occur. You should use the “If x, then y” format to create conditional statements.

Example Obligation: If the Wonder Wharf Wonderdogs play in the World Series, then Gene shall work each game day from 5pm until 11pm.

Example Discretionary Authority: If Gene gets a date for the prom, then Gene may skip work on prom night.

4. Use “Represents” to Create Representations

When you make a representation, you are alleging that a statement you are making is true, which benefits the other party because, if it isn’t true, they will have certain legal rights against you for damages they incur as a result of the misrepresentation.

Example: Gene represents to Bob that he can lift 20 pounds.

5. Keep Policy Statements Simple

When you need to define a word, establish how a contract is to be governed, or address the scope of an agreement, use simple policy language.

Example: “Intellectual Property” means all copyrights, trademarks…

Example: Missouri law governs this agreement…

Example: This agreement terminates on December 31, 2019.

(This article is general in nature and is not legal advice.)