The Importance of Clarity in Contract Drafting
A good contract is a memorial of a transaction between parties, and it should be practical, give expression to the intention of the parties, secures performance and averts disputes and litigation.
There is a misconception that drafting a contract is easy, merely a process of extracting clauses from a precedent. Good drafting, however, has a deceptive simplicity, it requires creativity, a fundamental grasp of contract law, a substantive analysis, a separation of concepts, insight into what must be included in the document to make it practical and effective and an arrangement of the material so that legal concepts flow easily. Above all, it requires an understanding of the use of grammar and an ability to write simply and to the point.
When a relationship breaks down it is often at this time that parties turn to the contract and with great scrutiny consider the contract terms and whether or not a dispute proceeds to litigation may hinge on how specific terms in the contract are drafted.
How do the court approach interpretation of contracts
Courts use a literal interpretation when considering a contract. If the language of a contract, read with the context of the contract as a whole is clear and unambiguous, it is given its ordinary meaning, irrespective of whether that meaning accurately reflects the common intention of the parties. Absent ambiguity, the meaning conveyed by the words themselves are given effect to, unless this interpretation would give rise to absurdity or inconsistency.
Drafting an understandable contract
Some basic principles to consider when drafting a contract
1. Use plain language
Plain simple language is the essence of good drafting. Where plain language can be used over ‘jargon’, it should be. If technical terms or jargon must be used, they should be defined terms and those terms should be explained in clear language, regardless of whether they are commonly used terms in the industry.
2. Avoid legalese
Discard legalese completely. Contrived jargon and legal hocus pocus such as “hereinbefore mentioned”, “heretofore”, “hereunto” etc should be avoided.
3. Guard against imprecision
Imprecision is caused either by ambiguity, vagueness or generality. A word may be ambiguous for many reasons, for example it may have more than one meaning in the context in which it is used or the ordinary reader cannot determine which part of the sentence the word qualifies or applies to.
For instance “The tenant shall repair any breakages and damage which he has caused” has two possible meanings namely, the tenant must repair:
- Damage which he has cause and any breakages; or
- Breakages which he has caused and damage which he has caused.
Vague words or expressions has no definite meaning e.g reasonable notice. Ambiguous or vague language should normally be avoided as it creates uncertainty which may either vitiate the contract or necessitate the leading of oral evidence in court to determine the intention of the parties.
