Since morning till the night we go to the bed, almost every person in his/her life execute some contract in one form or other. For example a person is planning to buy or sale a house or vehicle, equipment’s, share and assets etc. for all these purpose such person is required to enter into contract and execute it appropriately to confer legal enforceability to his/ her act. Accordingly it can be considered that every person in his/ her life is required to deal with some contract sooner or later.
Every draftsman while drafting any contract must have acquired and develop certain skills so that he/ she can suitably do the justice with any contract and the draftsman should have the knowledge of exact intention and the purpose of entering into contract so that the draftsman can successfully give legal written shape to the intention of the parties without any ambiguity, violating and breaching any applicable law which might be applicable upon the parties to the contract.
A draftsman should have the complete knowledge of the law while executing the contract. Suppose any client is intending to entering into a residential/ commercial rent contract then for such rent contract the draftsman must have knowledge of the provisions mentioned in the Indian Stamp Act, 1899 and Registration Act, 1908 and respective rent control Act and other applicable statutes and then he/ she should advice his/ her client accordingly because if the parties to the rent contract is entering into such contract for a period more than one year then such parties are mandatorily required to have such rent contract registered pursuant to the provision of Registration Act, 1908.
So being a prudent draftsman, he/ she should cover all the important elements of a good contract which he/ she should insert in any contract while drafting, whereby the interest of both the parties to the contract can be well protected and no place for misunderstanding would be left.
Here one question which might be arise in the mind of every person that how a person can acquire and develop such skills for drafting any contract and what should be the criteria on the fulfilling of which a person can make himself/ herself sure that the contract draft by him/ her has covered all the important aspects.
Practically the skills for drafting contract can be acquired and developed by any person only by doing more and more right practice and it can’t be acquired and developed overnight, within a day, week or a month. But it is more important that the person who is doing practice of drafting a contract is following the right path and only after keeping in mind some key points and standards at the time of drafting an contract.
An illustrative list of key points which can be proved fruitful and should be kept in mind by the draftsman while drafting any contract for the client is given below:
- Description of Parties: All the parties to contract should be clearly identified and their details should be clearly mentioned in the contract without leaving any place of ambiguity.
- Recital: Recital contains the background and reason for entering into the contract. Here the background and the intention of the parties that why they are entering into contract are provided.Generally the recital is not taken as evidence in case dispute arises but in exceptional circumstances recital may be used by the court of law for the purpose of taking it as evidence. In case there is some ambiguity in the interpretation of the operative part then court may take the help of the recital to interpret the contract.
Even it has been established by the court of law in the case of Ram Charan v. Girija Nandini, 3 SCR 841 (1965), that recitals carry evidentiary importance in the deed.
- Knowledge of Fact: While drafting any contract being a prudent draftsman, he/ she should confirm from the parties to the contract and write down the important facts of the contract. Suppose a person is intending to enter into commercial lease transaction then being a good draftsman he/she should have the knowledge about the area like whether entering into commercial transaction is permissible into that area or not.
- Knowledge of Law: A prudent draftsman should have the knowledge of the laws applicable to the concerned contract. Suppose a person is planning to enter into shareholder contract then the draftsman should have the knowledge of Companies Act, 2013, Indian Stamp Act, 1899 and Registration Act, 1908 etc. so that intention of the parties to the contract can be suitably mentioned without violating and breaching any applicable law.
- Be Clear: The terms and language used in any contract must be clear and easy to understand. A prudent draftsman should use only simple and straight language and the language which may create confusion in the mind of the reader should be avoided. For example if draftsman write the word “not less than 100 rupees” this might be little bit difficult and create confusion in the mind of the reader that whether author was intending to include 100 rupees or not. So instead of this draftsman can simply write “at least 100 rupees”.
- Detailed: A prudent draftsman should try to express the intention of the parties to any contract in detail and nothing should be left upon the parties to interpret. A draftsman should use only specific language which to keep less room of double interpretations and by expressing everything in writing the draftsman is simultaneously reducing the chances of future disputes. Suppose if a draftsman is writing that the “payment shall be made on the mid month of the each month” this might be little bit difficult and create confusion in the mind of the reader rather than writing this a draftsman should write the payment shall be made on or before 15th day of each month.
- Headings:The draftsman while drafting any contract should try to make proper heading of every clause to the possible extent. Because by doing this it will be easy for the reader to the contract to interpret any particular clause of contract. But the draftsman while making heading should take certain precautions as the headings should be matched and in the line of the content of the particular headings.
- Important Term and Conditions: Important terms and condition to the contract must be specifically mentioned by the prudent draftsman after ascertaining the fact from the client and having good knowledge of the laws applicable, if any. Here the terms like right and obligations of the each party, warranties and representation etc. are specifically mentioned.
- Termination Clause: The termination clause should be mentioned after doing proper discussion with the parties to the contract as it play key role in any contract. Here the terms on the basis of which contract shall be terminated and what shall happen upon the termination of contract like liabilities of the parties etc. shall be mentioned clearly.
- Stamping and Registration: Detailed particulars for who shall bear the cost of stamp duty and registration of an contract must be specified clearly because in some case registration of an contract is compulsory. Suppose a party is entering into commercial lease deed transaction for a period more than one year then such lease deed is required to be registered as per the provisions contained under the Registration Act, 1908. So in such a situation who will bear such registration charges should be specifically mentioned by the draftsman meaning thereby Lessee or Lessor or both.
- Arbitration Clause: The prudent draftsman should mention the arbitration clause in the contract clearly. The need of arbitration clause arise only when dispute arise between the parties to the contract.Although it is not mandatory to have this clause in the contract but in case the contract did not have this clause and dispute arise between the parties to an contract, then such dispute shall be referred to the court and in India approaching court is presently very time and money consuming exercise and on the different side arbitration is less time and money consuming exercise so it is suggested to have this clause in an contract.
The draftsman should also mention that the arbitrator shall be appointed by the consent of the both the parties.
- Jurisdiction: In case of dispute, which state or city court of law shall be entitled to entertain the dispute, if any, arose between the parties to the contract.
The draftsman needs to mention specifically in order to remove ambiguity at later stage.