Basic Information on Contracts

The main goal in the formation of a contract is whether or not the final contract clearly and completely memorializes the intent of the parties with respect to the particular transaction. It is not enough for the parties to have some ideas about the goals and purposes of the relationship if the contract does not provide a clear and unambiguous wording for the parties to follow in order to achieve their objectives. The contract must cover all of the required elements necessary for formation, interpretation and performance of a legally binding contract under applicable laws. To achieve this goal, both parties and their attorneys must fully understand the client's intent with regard to all material terms.

The contract should clearly state all of the rights and obligations of the parties necessary in order for them to achieve their underlying business goals and objectives. While the parties obviously contemplate that the performance of obligations between the parties will flow smoothly, the attorney does a disservice by not anticipating potential problems and crafting remedies in the contract before it is signed.

Role of Counsel in Contracting Process

It is absolutely essential that the attorney and client establish in advance their mutual expectations regarding the role that the lawyer is expected to perform in the negotiation, drafting, finalization and monitoring of a particular contact. In most cases, the attorney should be primarily responsible for drafting the contract and all related documents, including certificates and other documents that may need to be delivered at the time that the main contract is executed and the deal is "closed," and for spotting and resolving specific legal issues. The client typically will be responsible for identifying and resolving most, if not all, the business issues associated with the contract and the underlying relationship; however, depending on the situation and the relationship between attorney and client, it is not unheard of for counsel to become heavily involved in negotiation of business issues. In fact, a well qualified business attorney with business experience is often a key member of the management team and thus has a great deal of input on the strategic goals and objectives of a particular contract and its affects upon a business arrangement.

In some cases, the attorney may be present and active in almost all negotiating sessions; however, some clients prefer to take the opposite approach and limit the role of counsel to that of a scrivener working off of notes from periodic conversations with the client. Even if the client is not looking to have an attorney play a primary role in negotiating the terms of the contract, every effort should be made to notify the attorney as soon as possible that the transaction is contemplated. Even if the client has already settled on the key business terms of the contract, early notification provides counsel with an opportunity to collect all necessary details in advance and make preparations for drafting or reviewing the contract on a timely basis. For example, it is important to reserve the right to modify or re-address the agreed business terms of the transaction in the following instances:

• Where the transaction is based on certain assumptions regarding the anticipated tax consequences to one or both of the parties.
  
  
• Where the transaction is subject to complex regulatory schemes, such as securities, environmental or labor laws.
  
  
• Where the transaction involves underlying legal principles and case law that are rapidly changing, such as intellectual property or Internet law.
  
  

AGREEMENTS, DOCUMENTS & FORMS:

Contract Template
Offer of Bilateral Contract
Irrevocable Option
Withdrawal of Offer
Rejection of Offer
Acceptance of Offer
Simple Contract in Outline Form
Letter Agreement
Basic Confirmation for Sale-of-Goods Transaction
Contract Term Sheet
Memorandum of Understanding