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When drafting a contract, a company must consider several elements and components. The first step is to identify the parties involved and their respective roles. The terms of the contract should then be clearly defined in a language that is easy for both parties to understand. This includes details of payment plans, delivery dates, and specific expectations for the goods or services offered.
A common part of contracts is the inclusion of legal terms that describe what happens in the event of non-performance or breach of contract. It is important that both parties know their rights and obligations if certain conditions are not met.
Another aspect to consider is the time frame — setting deadlines for completion can help ensure that all sides are held accountable at every stage of a partnership. In addition, companies should also consider external factors such as market changes or external influences when drafting contracts in order to protect themselves from potential risks. If you take into account the above elements and factors when drafting a contract with another party, you create an efficient agreement that will lead all parties involved to common goals with mutual understanding. Here are 5 more tips to further improve your contract drafting:
1. Use simple and flat contract structures
Complex interlacing not only confuses the reader, but also requires more time to review.
Therefore, it is first important to give the document a simple but professional structure. When we talk about the structure of a contract at this point, we are referring to the number of clause levels.
As part of our work, we often encounter contracts that use fourth or fifth level divisions. It often looks like this: 1.3.4.1.2 a). With these structures, you exert undue stress on the reader's brain. As a result, interaction with the contract takes longer or the review is postponed.
Simple structures, on the other hand, look professional, and complex references and relationships are easier and faster to grasp. Therefore, in practice, when creating the template, it is worth making sure to drag nested subsections onto the layer above them if possible.
2. Useful headings for each clause enable rapid entry
Use meaningful and explanatory headings for each clause. As with a good presentation, a contract should also work with headlines that guide the reader through the issue. As soon as you do not use any or only insignificant headings in the contract, you quickly lose the reader in the hustle and bustle of the contract text and the review is delayed.
Useful headlines act as guideposts
Meaningful headlines, on the other hand, quickly lead the reader to the relevant parts of the contract. In this way, the buyer does not want to have to guess where the commercial details of the contract are hidden. Likewise, the compliance or data protection officer does not want to go over the entire contract to provide the details of compliance with data protection or to maintain industry standards.
Only numbers without headings only slightly increase readability
The worst possible result is to use only numbers or paragraph characters as markers for new clauses. For the reader, the contract is therefore initially a wall of letters, which is only revealed after a detailed examination.
If you are afraid of the unwanted legal consequences, you can simply rule out the legal validity of the headings in the document.
A good note: Headlines are important, but they shouldn't be formatted as small caps. This is often not for better readability.
3. Use uniform formatting and structure for all contracts
The decisive advantage of uniform formatting and structure is the high recognition value, which will help you to find clauses quickly and easily.
If you regularly adjust the contract structure or formatting for no reason, you will find it difficult to find wording in contracts in the future.
However, as soon as you always follow a specified scheme when drawing up contracts (for example, always sign the liability clause with number 10), this makes evaluating the contracts much easier.
Avoid different types of formatting
Your formatting should also remain the same across all contract types. Don't switch between different formats. Your customers also get used to your formats and the recognition value suffers if you present contracts differently.
If you set up your contracts in a simple text editing program, pay particular attention to ensuring that the contract is uniform. Nothing is more confusing than when the format of the contract is constantly changing. This also applies to the formatting of headings.
Block sentence is difficult to read and leads to evasion
Even though the block sentence is very common when drawing up contracts, it is usually harder to read than a one-link flutter substitute. The reason for this is that words are currently not automatically separated in a simple text editor.
In addition, contracts that are drawn up in the German language often contain longer words. This means that there are often isolated words with lots of white text on one line and the reader's attention must always move further in order to get to the next word. After repeated concentration, the eyes quickly get tired and the contract is simply put aside at some point.
4. Graphics and illustrations can easily represent complex relationships
Many contracts used in sales often have complex technical sections which, if you want to explain them in text, would require many complex words. A diagram or illustration can provide an excellent remedy in such situations. Flowcharts or simple illustrations of the product can often be used to provide customers with a better understanding.
In addition to the fact that graphics and illustrations break the monotony of a lot of text and make the document more visually attractive, they also help to significantly improve the understanding of the content. In this way, illustrations can help companies overcome the last hurdle of correctly communicating complex concepts and terms to their counterpart.
Empathic illustrations are the accessories of the contract
Especially for corporate customers with many and complex decision-making structures, it is useful to pick up decision makers who were not part of the sales process using empathetic illustrations and simple diagrams. This brings them to a faster conclusion in the last phase of the sales process.
5. Explain complex clauses and avoid references to legal texts
Contracts often contain complex clauses and references to codes of law. This will definitely ensure that you scare off legal laymen and that the contract ends up with the legal department for approval. This wastes valuable time that could have been better invested in other things.
References without specifying the content mean work for the reader
For presentations and documents in the business world, it is sometimes common to reference studies, but the study results are always mentioned as well. In contracts, it has become a practice to reference legislative texts without mentioning their content. This procedure may help experts who already have the content of the marked area in mind. However, laymen (who are the actual users of the contract) fall by the wayside.
The same applies to references and abbreviations: Don't make it too difficult for your counterpart to evaluate the contract. References to documents that are not immediately available also mean work that may be done at the back. This means that your contract is quickly closed.
Complex clauses usually trigger a compliance process that delays completion
The situation is similar with complex clauses that are not obvious at first glance. If there is no explanation here, the lack of understanding on the recipient side usually triggers a compliance process that leaves the signature a long way off or can bring down the deal. When you create MS Word or use another word processing program, then you should make use of the option to add explanatory comments to the document.
Explanations in text and video format give contracts back their friendliness
With professional contract software such as top.legal, it is usually possible to explain complex clauses on the meta level with text or video snippets. This allows you to dissolve even complex formulations with a dash of humanity and come to a conclusion more quickly.
