Drafting And Interpreting Contracts InfoPAK

Updated February 2007

Provided by the Association of Corporate Counsel
1025 Connecticut Avenue, Suite 200
Washington, D.C. 20036
Tel 202.293.4103
Fax 202.293.4701
www.acc.com

This InfoPAK^SM is to provide the reader with the basics of drafting and interpreting contracts. Contained in this InfoPAK are links to ACC online resources, as well as sample documents. This information should not be construed as legal advice or legal opinion on specific facts, or representative of the views of ACC or any of its lawyers, unless so stated. This is not intended as a definitive statement on the subject but a tool, providing practical information for the reader. We hope that you find this material useful. Thank you for contacting the Association of Corporate Counsel.

This InfoPAK was developed and sponsored by:

Nicholas G. Karambelas, Esq.
Sfikas & Karambelas, LLP

Table of Contents

1. Purpose Of Contract Drafting And Contract Reading


2. Brief Review Of Fundamental Principles Of Contract Law
   
   1. Definition of a Contract
   2. Intent to Contract — Mutual Assent
   3. Offer — Acceptance
   4. Consideration — Promissory Estoppel
   5. Conditions-Express or Implied
   6. Expiration —Termination— Termination of Contracts Prior to Completion of Performanc
   7. Definite Term —Indefinite Term— Perpetual
   8. Statute of Frauds


3. 
   
   1. Know the Subject Matter of the Contract
   2. Organizing the Written Contract
      
      1. Identify Parties and Capacities
      2. "Bargained-For" Exchange
      3. Contract Governance
      4. Execution of the Contract and Electronic Signatures
   3. Letter of Intent
   4. Memorandum of Understanding
   5. Notarial Instruments — Civil Law Systems
   6. Civil Law Notary in the United States


4. Contract Drafting Techniques
   
   1. Clear Writing Begins with Clear Thinking
   2. Use of "Shall", "Must" , "May", and "Will"
   3. Use of Active Language Rather Than Passive Language; Affirmative Language Rather Than Negative Language
   4. Use of the Present Tense
   5. Use of "And" and "Or
   6. Use of "Any", "Each", and "No"
   7. Use of Number of Days Rather Than Months or Years
   8. Use of "Unless" and "As Long As"
   9. Use of "Reasonableness" Clause
   10. Use of Legal Terms of Art
   11. Use of the General and the Particular
   12. Time
   13. No "Whereas"
   14. Nunc Pro Tunc


5. Principles Of Interpreting Contacts
   
   1. The Plain Meaning Rule
   2. Language Construed Against Drafter
   3. Accord Meaning to All Terms
   4. Conflicting Terms
   5. The Parol Evidence Rule Distinguished from the Plain Meaning Rule
   6. Relational Contracts


6. Contracts Subject To Specific Statutes
   
   1. Uniform Commercial Code Article 2 — Sale of Goods
   2. U.N. Convention on International Sale of Goods (CISG)
   3. UNIDROIT Principles
   4. Sales and Leases of Real Property
   5. Business Entity Agreements
   6. Uniform Computer Information Transfer Act (UCITA) — ABA Model Act


7. Ethical Considerations In Contract Negotiation And Drafting
   
   1. Dealing with an Unrepresented Party (Rule 4.3)
   2. Rendering Services to Two or More Parties (Rules 1.7)


8. Additional Resources


9. Sample Form — Franchise Agreement


10. About the Author