How do you select the most important clauses for your contracts?

1 Know your goals and risks

Before you start drafting or reviewing a contract, you need to have a clear idea of what you want to achieve and what you want to avoid. What are your main objectives, expectations, and deliverables? What are the potential pitfalls, liabilities, and conflicts? How will you measure and enforce performance, quality, and compliance? How will you resolve disputes and terminate the contract if necessary? By answering these questions, you can identify the most relevant and essential clauses for your contract.

2 Research the market and the law

Another important step is to research the market and the law related to your contract. What are the industry standards and best practices for your type of contract? What are the legal requirements and regulations that apply to your contract? How do other parties in similar situations negotiate and structure their contracts? By doing your homework, you can benchmark your contract against the market and the law, and avoid any gaps, errors, or unfair terms.

3 Prioritize the deal-breakers

Not all clauses are equally important or negotiable. Some clauses are deal-breakers, meaning that they are essential for you to enter into the contract, and that you are not willing to compromise or accept any changes. These clauses usually relate to the core aspects of the contract, such as the scope, price, payment, duration, and termination. You should focus on these clauses first, and make sure that they reflect your goals and risks accurately and clearly.

4 Balance the trade-offs

Some clauses are not deal-breakers, but they still have a significant impact on your contract. These clauses are trade-offs, meaning that they involve some degree of flexibility, compromise, or concession from both parties. These clauses usually relate to the secondary aspects of the contract, such as the warranties, indemnities, limitations of liability, and dispute resolution. You should balance these clauses carefully, and weigh the pros and cons of each option.

5 Review the boilerplate

Some clauses are not deal-breakers or trade-offs, but they still have a legal effect on your contract. These clauses are boilerplate, meaning that they are standard or common terms that are often used in contracts. These clauses usually relate to the general aspects of the contract, such as the definitions, notices, severability, and governing law. You should review these clauses cautiously, and make sure that they are consistent and compatible with the rest of the contract.

6 Seek professional advice

Finally, if you are not sure about any clause or term in your contract, or if you encounter any complex or contentious issue, you should seek professional advice from a lawyer, an accountant, or a consultant. They can help you understand the implications and consequences of each clause, and advise you on how to negotiate and draft the best contract for your situation.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?