As the director of a small company, you are often the manager, human resources manager and legal expert all rolled into one. This means you have to do a bit of everything, including drafting your own contracts.
Here are the top 5 mistakes we notice in this type of contract, when they are not submitted for litigation.
1. Lack of clarity
If you draft your own contract, you can be sure of drawing up a personalized contract that covers every aspect of your agreement with your co-contractor. However, you also run the risk of losing sight of the big picture, and of a contract that is perfectly clear and detailed at the time of drafting becoming unreadable in the event of a dispute.
The number of clauses, the lack of standardized language and the complexity of the provisions, which are sometimes the result of lengthy negotiations, make the contract difficult to read, and sometimes even lead to contradictory provisions.
This becomes a problem in the event of disagreement between the parties, and the need to submit the contract to a judge or arbitrator.
2. Lack of provisions to prevent or resolve conflicts
Many contracts contain incomplete clauses. The best example is the price renegotiation clause, which can be found several times in the same contract. It is often stipulated that in the event of any event whatsoever, the parties undertake to renegotiate the price, or one party may propose a price increase to the other.
In reality, however, and especially in financial matters, negotiations often fail. In such cases, the price revision clause makes no provision: does the contract continue? Is the contract terminated? Should a conciliator be appointed?
It is the role of the contract to provide for unforeseen circumstances, so that when they arise, the parties are not left in the dark. If the parties change their minds by mutual agreement, there will always be time to conclude an amendment to settle the dispute in another way.
3. The presence of illegal clauses
Even if commercial contracts can be drafted very freely, there are a few clauses that cannot be inserted and will not be applicable in the event of a dispute.
In this respect, we note excessive jurisdiction clauses, limitation of liability clauses or penalty clauses, poorly drafted retention of title clauses, and so on.
What’s more, in the absence of specific provisions, the presence of an unlawful clause can jeopardize the entire contract.
These clauses give the drafter a false sense of security, and are a nasty surprise when he or she tries to enforce them in the event of a dispute.
Whether you have doubts about the wording of a contract, or need help negotiating with an opposing party, we can help you. We recommend this even more strongly when your co-contractor is himself advised by a professional.
