Contract drafting conventions

To facilitate consistency amongst the various model contracts used throughout an organisation and to enable the use of contract building blocks across different model contracts (whether in Word-form or as a template available in a contract assembly software application), it is strongly recommended to develop a reference set of contract drafting conventions. Such contract drafting conventions should not only establish the principles to be applied throughout the model contracts but should also reflect the choices made in relation to the model contracts and model contract clauses.

A complete book such as Willem Wiggers’ Drafting Contracts – Techniques, best practice rules and recommendations related to contract drafting (Kluwer 2011) may serve as a ‘contract drafting convention’ but for practical use a high-level summary and a short list of key choices is preferable. In case of doubt, reference may be made to this book. the integral text of it is on the website of Weagree.

Part A. – Best practices of contract drafting

If it is important, it should be addressed in the recitals, conditions or warranties. Less important matters should be self-explanatory.

Best Practice Rule Explanation, example
1. Use ‘plain English’ and stay close to layman (business-manager) interpretation
  • Prefer ‘British English’ to ‘U.S. English’, especially regarding spelling.
  • Avoid fashionable wording (business jargon).
  • Avoid overly legalistic wording or superfluous phrases (g. “among and between”, “agree and covenant”, “any and all”, “by and between”, “adjust, amend or otherwise modify”, “confirm and represent”, “if and to the extent” – however, any replacement should not affect appropriate particularities of common law or other actual national-legal concept).
  • Do not use and/or.
2. Use the present, active tense, personalise sentences and use the singular
  • Avoid “It is agreed” and “… by [ABC]”.
  • Obligations should point to a contract party.
  • Avoid nominalisations (i.e. verbs transformed into nouns).
  • Never use, or delete, (s) and everything that it triggers.
3. Simplify: keep sentences short and delete unnecessary words
  • Preferably, no sentence should exceed 17 words and no word should exceed five syllables.
  • Delete, where possible: “The Parties agree that” (in most cases, it would be followed by the obligation that “Seller shall …”).
  • Do not overload a contract with boilerplate clauses; preferably, use them only where necessary or desirable.
  • Delete superfluous wording (e.g. in most cases: “during the term of this Agreement”).
4. Be consistent (rigorously)
  • Do not vary words or phrases for no reason.
  • Apply enumerations in a consistent (and natural) order.
  • Avoid imposing obligations that contradict real-life practices (retain your company’s character, style and policies).
5. If possible, use shall + infinitive and not the notional verb as an auxiliary This avoids contract assembly complications: if the notional verb is also the auxiliary verb, the automated contract should provide for the plural and the singular each time it is used (e.g. “Purchaser shall permit” as opposed to “[Purchaser permits] [Purchasers permit]” and everything this triggers).
6. Bring exceptions, limitations and qualifications together
  • Preferably, the exceptions, limitations and qualifications should follow the main principle or obligation. However, if they are (very) short, put them at the beginning of a sentence or provision.
  • Exceptions, limitations and qualifications spanning over more than one line should be enumerated in subparagraphs.
7. Do not explain ‘why’ (avoid using enabling or in order to) If it is important, it should be addressed in the recitals, conditions or warranties. Less important matters should be self-explanatory.
8. Avoid legalese
  • Reduce the use of ‘doublets’ and ‘triplets’ to those that are relevant and important.
  • Avoid “said” (use “such” reluctantly – “the” is often unequivocally clear).
9. Do not use without limitation after including
  • Only exceptionally, and not in day-to-day English, including would be understood to be followed by an exhaustive listing.
  • The same applies to but not limited to.
10. Do not use it being understood
  • The words do not add anything to what follows.
  • The same applies to “Service Provider understands and agrees”, it is acknowledged that and words of similar import.
11. Use be entitled to instead of may The use of may is susceptible to ambiguity.
12. Name the ‘own party’ and use the functional reference for the ‘other party’ For example, Weagree vs. Licensor.
13. Definitions will be marked bold and not underlined, and not placed between quotation marks Example: Product means the products listed in…
14. Obligations (and covenants) will be strictly separated from recitals, definitions, conditions, and warranties or representations
  • Recitals (whereas-clauses), warranties and representations must be nothing more than a statement of fact.
  • Definitions may not contain obligatory language.
  • Obligations remedying any failing warranty or representation should be addressed separately (i.e. in a separate clause).
15. Numbers in a provision should be simple and must avoid risks of mistakes
  • Do not both use numbers and write them out (e. no “60 (sixty) days”), except if the amount so written may cause confusion (e.g. “EUR 1 (one euro)” or “0 (zero)”) or if a large key amount is at stake (e.g. the base purchase price in a share purchase agreement).
  • Numbers up to ten (inclusive) shall be written out. Numbers above ten shall be expressed by the figure only (g. 45; 90; 1,500). However, consistency within a contract section prevails.
  • Regardless, percentages, prices, hours, days of the month and numbers in ‘enumerations’ will be in figure only (g. 9 March, 10:30 a.m., 6 percent and between 9 and 15).
  • Sentences must not start with a figure.
  • Use figure + percent” instead of % (e.g. 9 percent).
16. Names and document references should be in italics if they are capitalised but not ‘defined’ International Chamber of Commerce; REACH, Good Manufacturing Practices, IFRS, the U.S. Export Administration.
17. Avoid referencing statutory provisions For example, “group of companies as defined in article 2:24b of the Dutch Civil Code”.
18. Reduce cross-referencing Cross-references might trigger contract assembly complications: as such, there is no objection against cross-referencing, but both the referring and the referred-to clause should always appear in the resulting document.

Part B – Preferred terminology in contracts

Preferred terminology To be replaced
Agreement (capitalised) agreement, contract.
Party or Parties party and parties.
Purchaser, Seller, Customer Buyer, Vendor, Supplier, Service Recipient, Company.
in / of / to this Agreement herein, hereof, hereto (i.e. also parties hereto, on the date hereof).
Affiliate
  • Affiliated Company; group company.
  • Use Subsidiary if necessary only.
Product Goods.
Completion Closing
shall
  • Replace will and must (except in letter agreements or amendment letters).
  • Do not use both shall and will.
Article for articles; Section for sections (at ‘level 2’); and item for paragraphs, sub-sections and enumerations (level 3 and above) Clause, sub-section, paragraph, subparagraph and (for articles) section.
Schedules for attachments to the main agreement and Annex for attachments to schedules Exhibit, Appendix, Attachment.

Part C – Presentation

  • Cover page. An agreement must get a cover page if it exceeds ten pages or if it is confidential.
  • Table of contents. An agreement should get a table of contents if it contains more than ten articles and more than ten pages.
  • Position list of schedules. A list of schedules is included underneath the table of contents (unless it breaks over the pages, in which case it will be placed on a separate page).
  • Headers & footers. Contracts must be marked confidential (and not strictly confidential or privileged) on each page. The footers will identify the title of the agreement and the short names of the (two or three main) contracting parties.
  • Schedules, annexes. Use schedules to the main agreement. If a schedule itself contains exhibits, the exhibits will be called annex.
  • Clause numbering and captions. If an article consists of more sections, they must be automatically numbering. Each level-2 numbered section gets an underlined, bold-print caption followed by a (non-underlined) full stop.