How to do contract summarization?

To go through entire contract to learn legal cum business obligations and risks is a time consuming process – Contract Summarization (“Summarization”) will be best apt mode to get short/crisp contractual summary of single/few contracts in a short period of time.

Summarization will be a short summary of all key provisions of entire contract.

Summarization does not mean replicating the entire contract in a summary form. Summarization is systematic way of listing out all vital clauses in a sequence for quick glance and understanding of the crux and essence of all vital clauses of a contract.

To sum up all vital clauses of a contract in a short and crisp manner good legal writing skills will be a vital trait in armour of professionals. 

Develop a habit of writing legal articles and posts to hone writing skills - Writing on various legal and contract subjects on constant basis will enhance legal writing skills to a great deal.

Easy way to learn and do Summarization of a contract is to summarize clause by clause. Further break a clause into short and precise points which will simplify summarization process.

The crux of Summarization is not only to highlight critical aspects of all vital clauses in a contract but also to facilitate the readers to easily understand the crux and essence of entire contract with a precise summary of contract.

To accomplish aforesaid proposition, write a summary of a contract using simple language for easy understanding of readers (legal/non-legal persons).

Avoid usage of fancy words or high end terminology as usage of such terminology will make it difficult for readers with normal IQ (Intelligence Quotient) to understand the summary of contract.

A well written summary is the one which will enable reader of any kind to understand and analyze the crux and essence of a contract.

Illustration 1: Indemnity provision

“Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from Lessee's use of the Premises, or from the conduct of Lessee's business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee's part to be performed under the terms of this Lease, or arising from any negligence of the Lessee, or any of Lessee's agents, contractors, or employees, and from and against all costs, attorney's fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Lessor shall defend the same at Lessee's expense by counsel satisfactory to Lessor. Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against Lessor.”

Summary

·      Indemnifying party: Lessee

·      Indemnified party: Lessor

·      Scope of Indemnity: Lessee to indemnify and hold harmless Lessor from any indemnity claims reflecting from:

a) Lessee's use of the Premises,

b) Conduct of Lessee's business or any activity in or about the Premises;

c)  Any breach or default in the performance of any lease obligation by Lessee; or

d) Negligence of Lessee, or its agents, contractors, or employees;

From and against all costs, attorney's fees, expenses and liabilities associated with indemnity defense or claim.

·      Indemnity obligation: Lessee, at its own expense, has to defend Lessor from any indemnity claim or proceeding via engaging counsel to satisfaction of Lessor subject to receipt of indemnity notice from Lessor.

·      Assumption of risk: Lessee has to assume risk of damage to property or injury to person in relation to premises.

·      Waiver: All claims in relation to aforesaid risks will be waived by Lessee.

Illustration 2: Termination Provision

Sample Language:

·      Termination for Material Breach: Each party may terminate this agreement with immediate effect by delivering notice of the termination to the other party, if

a.  the other party fails to perform, has made or makes any inaccuracy in, or otherwise materially breaches, any of its covenants, representations, or obligations, and

b.  The failure, inaccuracy, or breach continues for a period of 15 Business Days' after the injured party delivers notice to the breaching party reasonably detailing the breach.

·      Termination for Insolvency: If either party becomes insolvent, bankrupt, or enters receivership, dissolution, or liquidation, the other party may terminate this agreement with immediate effect.

·      Termination for Change of Control: Either party may terminate this agreement with immediate effect, by giving notice to the other party, in the event of a Change in Control of the other party.

Summarization: Either party may terminate the Agreement with immediate effect:

a) For material breach of contract by other party provided such material breach continues for a period of 15 business days from date of receipt of breach notice from such party;

b) For other party being part of any bankruptcy and insolvency proceedings or arrangement; and

c)  For occurrence of any change of control event of other party via serving termination notice to other party.

To sum up, Summarization of a contract has to reflect all critical nuances (risks, obligations, duties and rights) embedded in such contract in a reader friendly format.