Consideration
Consideration is an exchange of something of value. Therefore, as a drafter you should be wary of drafting an illusory contract that promises nothing such as when one party has the option of not performing, perhaps because of a satisfaction clause, or when a party is not under any obligation to perform, perhaps because of the lack of mutuality.
Essential terms
These are terms which are required in order for the contract to exist. For example, a contract for the sale of goods needs to identify the parties, price, quantity, date of delivery, and payment terms.
Definite terms:
As a drafter you must consider statutory or judicial interpretations of key terms, and custom and usage. In addition, you must beware of relying on definitions outside the terms of the contract. Further, you must be sure the contract does not contain conflicting terms concerning material items.
Violation of the law
In drafting you must avoid violating the law. For example, a contract may violate the law because it is illegal, it fails to follow the form required by law, it omits required language, it waives rights where the law does not permit waiver, or it includes unconscionable terms among others.
Capacity of the parties to contract
When drafting you should consider whether issues of capacity are raised by the parties’ status, such as mental capacity, age, or lack of authority; or by the parties’ behaviour, such as fraud, duress, or undue influence.
Client’s interests
In drafting a contract you should consider whether your client’s interests are best protected by including (or excluding) a merger (or entire agreement) clause, inspection clause, warranty, or an absolute promise to perform.
Performance
As a drafter should consider what terms will best protect the client for occurrences outside its control, perhaps using a force majeure clause; what conditions must occur for performance; and what warranties should be included after checking for any prior oral or written representations, any description of goods, samples or models shown, any plans or blueprints, any specifications, any market or official standards, any brochures, any advertisements, and the quality of goods received.
If the client wants specific performance, you must establish the uniqueness of the goods or services, or the special circumstances of the sale.
For money damages, you must consider whether to provide expressly for consequential, incidental, cover, liquidated and punitive damages.
Remember: The laws governing money damages will vary in different jurisdictions.
Effect on third parties
When drafting a contract you must consider whether to allow assignment of rights, delegation of duties, or transfer of rights and duties.
Additional requirements imposed by statute
Certain statutes may require or bar specific provisions concerning various subjects, such as contracts involving the sale of real estate, or parties, such as consumers. You must be conversant with concerned statutes when drafting such contracts.
Requirements of the client
To determine the requirements of the client, as a drafter you must be familiar not only with the nature of the transaction, but also the nature of the client’s operation, including the client’s long-term and short-term business goals and the nature of the business in general.
Client’s goals: you must identify the client’s express and implied goals. Express goals are those that would be included in the contract, and implied goals might include the client’s way of doing business.
Degree of risk
As a drafter you must determine each imaginable risk; you must be familiar with the nature of the contract and the business environment in which it will operate. The more you learn about how the client and the client’s industry operate the better you can determine what risks are involved.
You should consider the client’s prior experience as well as prior experience in the industry to determine if the risk is realistic and if the dangers are significant.
You must allocate the risk in a way that reasonably protects the client from risk she does not wish to assume. You must consider how the risk can be avoided (if at all), what the cost of avoidance would be, who would bear the cost of avoidance, how the risk could be reduced, how the risk could be spread, who would be liable for damages if the risk materialized, and what appropriate limitations on that party’s liability for damages might be included.
In addition, you must consider whether the law precludes a party from avoiding the risk.
Also remember, you cannot define the risk in the contract in a way that would make the contract illusory.