Contracts Part II: Laying the Groundwork
.
3. Attorneys are Scribes– Not Business People
Clients sometimes think their attorneys are capable of anything, but regardless how wise and talented they may be, attorneys are simply not business people, and, therein, lies a huge distinction lost on many clients.
The role of an attorney in any transaction is to reduce the intentions and expectations of the parties to a writing that can be used by them as a guide to future conduct.
Attorneys can help principals fill in the blanks regarding many elements of a transaction, but are, generally, not competent to frame material business terms that should be the responsibility of the principals, themselves.
4. Principals Should Understand What They Read
If you read an agreement drafted by counsel and cannot understand it, the draft should be revised using language capable of being readily understood.
On the other hand, principals need to be involved in the contract drafting process. They should not assume an agreement drafted by counsel is what it should be just because an attorney drafted it. Oftentimes, the best contract language can come from the principals, themselves, who, after all, are the real experts in the transaction they are trying to conclude.
Also, by being actively involved in the drafting process, a principal can become extremely familiar with the contract, itself, which can become a source of advantage to him or her in the future business relationship.
5. The Take Away
- Think carefully through the transaction in question before instructing counsel to draft the corresponding contract;
- Principals should use a Term Sheet or Letter of Intent as a basis for identifying and resolving material terms of a transaction in advance of commencing the contract drafting phase;
- Be actively involved in the drafting process so that the language of the agreement is capable of being understood even by persons who are not attorneys.
Related articles:
When Is an Oral Contract a Legally Binding Agreement?
