Corporate & Commercial Legal Matters
Find a Good Drafter on commercial legal documents

Common Mistakes in Contract Drafting

Losses Resulting from a Bad Contract

A contract is a legal document binding you and another party to certain obligations. This is very important on commercial transactions. Merchants rely on contracts to enforce their legal rights. Making one tiny mistake in drafting a contract could mean a lot to a business:

  1. loss of time in disputes when time can be spent in business course
  2. loss of money in disputing through legal proceedings
  3. loss of reputation due to publicity of disputes
  4. loss of customers if the dispute relates to your customers. 

Before you sit down to create a contract, take some time to learn the most common mistakes business owners make when they're drafting a contract.

6 Common Mistakes on Drafting Commercial Contracts

Mistake #1: Being unprepared. 

Insufficient facts, figures, and data. Insufficient understanding of costs, due dates, obligations, responsibilities

Mistake #2: Not binding as a "contract." 

Contract has a legal meaning in law. If you don't put sufficient elements in it, it fails to be enforced in court.

Mistake #3: Terms too vague. 

The terms and clauses are too wide or too vague to cover sufficient matters. It therefore leaves much room for disputes or arguments. Some are supplemented by oral terms which become factually arguable.

Mistake #4: Confusing wording. 

Sentences are too brief or unclear. At times, wrong wordings or words are used. Terms are drafted in bad English or incomprehensible terminologies.

Mistake #5: Too hurried. 

Parties rushed to sign the contracts just want to get the deal done as quickly as possible. Many terms are left opened and undecided. This results in room for disputes.

Mistake #6: Not using a lawyer.

You can prepare a draft or set out your most important terms and conditions. But you should always find a lawyer to review the final document. If you don't know a thing, you just don't know. Don't think that you are as good as a lawyer. It's better to be overly cautious now than to be sorry later. A dispute can cost 10 or even a hundred times of your legal expenses. A lawyer makes a little less but a dispute can ruin your life or cost your entire business.