20 COMMON FREQUENT MISTAKES IN CONTRACT DRAFTING AND REMEDIESBlog

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Mistake

Why It Creates Problems

How to Avoid It

1.

Ambiguity and Language Errors

Terms like "reasonable time," "best efforts," or "promptly" without objective metrics leave too much room for interpretation.

Define terms explicitly with specific dates, metrics, or objective standards (e.g., "within 5 business days" instead of "promptly").

2.

Inconsistent Defined Terms

Capitalising a term in one section (e.g., "the Services") but using lowercase elsewhere, or changing the definition mid-contract.

Capitalise all defined terms consistently throughout the document and include a dedicated "Definitions" section at the outset.

3.

Confusing "Shall," "Will," and "May"

Using these words interchangeably, which blurs the line between a mandatory obligation and a permissive right.

Use "shall" exclusively to impose a duty/obligation, "will" for future occurrences or statements of fact, and "may" to grant a discretionary right.

4.

Overusing Legalese and Archaic Terms

Relying on phrases like "heretofore," "witnesseth," or "said party," which obscures the actual meaning of the clause.

Write in plain, clear, professional English. Simple language is legally binding and far less prone to misinterpretation.

5.

Typographical and Cross-Referencing Errors

Pointing to "Section 4.2" when the content was moved to "Section 4.3" during revisions, or failing to catch simple typos.

Conduct a thorough final review using automated find-and-replace checks and verify every single internal cross-reference manually.

6.

Defined Scope of Work

Vaguely describing deliverables, leading to "scope creep" where one party expects more than the other agreed to provide.

Detail exact deliverables, milestones, specifications, and timelines—ideally in an attached Statement of Work (SOW) or Exhibit.

7.

Omitting Payment Terms and Details

Specifying the total price without outlining invoicing schedules, late fees, currency types, or reimbursement policies.

Clearly state the exact payment amounts, due dates, invoicing procedures, penalties for late payments, and acceptable payment methods.

8.

Ignoring Intellectual Property (IP) Rights

Failing to state who owns the work product, code, designs, or content created during the contractual relationship.

Explicitly allocate IP ownership: state whether the client owns it upon creation, whether the creator retains ownership with a license granted, or how pre-existing IP is handled.

9.

Lack of Alignment Between Exhibits and Main Body

Including terms in an exhibit or schedule that contradict provisions in the main body of the contract.

Establish an "Order of Precedence" clause at the beginning of the agreement to clarify which section overrides others if an inconsistency arises.

10.

Overlooking Boilerplate Clauses

Treating standard boilerplate clauses (like notices, severability, or entire agreement clauses) as mere "filler" and copying them blindly without customization.

Tailor every boilerplate clause to the specific transaction; for example, ensure notice provisions include current email addresses and physical mailing locations.

11.

Unrealistic or Missing Termination Clauses

Forgetting to include how a party can walk away, or setting an impossibly difficult procedure for termination.

Include clear provisions for termination "for convenience" (with advance written notice) and "for cause" (upon a material breach).

12.

Inadequate Remedies for Breach

Assuming the law will automatically provide the desired remedy without specifying what happens when a party defaults.

Outline specific remedies for default, such as withholding performance, cure periods (e.g., 30 days to fix an issue), or specific performance.

13.

Poorly Drafted Limitation of Liability and Indemnification

Leaving liability unlimited or drafting indemnification clauses so broadly that they cover standard operational risks or gross negligence improperly.

Cap financial liability (often tied to fees paid under the contract) and clearly define who indemnifies whom, for what specific third-party claims, and under what conditions.

14.

Neglecting Confidentiality and Data Protection

Failing to protect sensitive information shared during the business relationship or ignoring modern data privacy laws (like DPDP Act).

Include a robust Non-Disclosure Agreement (NDA) section or a standalone NDA that outlines the duration of confidentiality, permitted uses, and data security standards.

15.

Overlooking Force Majeure Nuances

Using a cookie-cutter force majeure clause that fails to address modern realities (such as cyberattacks, regional supply chain failures, or global health emergencies).

Explicitly list what constitutes a force majeure event, require prompt notification if one occurs, and set rules for contract termination if the event persists beyond a certain timeframe.

16.

Choosing the Wrong Governing Law and Jurisdiction

Agreeing to a governing law or court jurisdiction located in an inconvenient, distant state or country without realizing the cost implications.

Select a neutral or convenient jurisdiction (typically your home state/country) and specify whether disputes will be handled through courts or alternative dispute resolution (ADR) like arbitration.

17.

Failing to Verify Signatory Authority

Having a contract signed by someone who lacks the legal authority to bind the company (e.g., an employee who is not an officer or authorised manager).

Confirm corporate authority, require a resolution or title check if dealing with high-value contracts, and ensure the signature block includes the signer's official corporate title.

18.

Ignoring Electronic Signature and Counterpart Validity

Creating obstacles for modern remote signing, or failing to state that the agreement can be signed in multiple counterparts.

Include a "Counterparts and Electronic Signatures" clause confirming that digital signatures (via tools like DocuSign or Adobe Sign) are fully legally binding.

19.

Relying on Oral Modifications or Side Agreements

Allowing informal emails or verbal conversations to alter written contract terms without formal documentation.

Include an "Entire Agreement" (Integration) clause and a "No Oral Modification" clause stating that changes are only valid if signed in writing by both parties.

20.

Skipping Legal Review

Rushing to close a deal using a generic template downloaded from the internet without customizing it or having a qualified attorney review it.

Always have a legal professional review high-stakes, complex, or high-value contracts to catch hidden loopholes and compliance risks before signing.