Key Terms
BAD
"Agreement" or "Contract" — forces the reader to read the whole document just to know what it is.
GOOD
"Employment Agreement Between [Party A] and [Party B]" — the nature of the document is clear from the title alone.
Define material terms
Goods, services, quantity, quality, price. Industry-specific terms should also be defined.
Covenant
A formal promise to perform specific obligations in a contract.
ACTIVE (correct)
"Buyer will pay Seller ten dollars." PASSIVE (problematic): "Seller shall be paid ten dollars."
Condition
Something that must occur before performance is due; must be expressly stated to be enforceable.
Example
Escrow amounts in property transactions commonly change between contract preparation and signing; a direct markup with i
Material breach
A substantial breach that excuses the non-breaching party from further performance and entitles them to sue for damages.
Definition
A provision that allocates risk when performance becomes impossible due to an unforeseeable, uncontrollable event.
Benefits
Saves time and money in litigation because the value is already established.
Four Differences
Warranties vs. Representations
Best practice
Discuss modification procedures when entering the contract. Clear procedures = less friction later.
General rule
Parties are free to assign rights and delegate duties under a contract.
Choice of law
Determines which state's laws govern interpretation of the contract.
Choice of forum
Determines which state's courts handle litigation over the contract.