Create a Clear, Logical Structure

There are several important but necessary principles you should apply to make your legal agreements better, including using

• plain language
• short, declarative sentences
• clear, descriptive captions
• only one concept per clause
• lots of white space

One of the things that will have the largest impact in improving your drafting, however, is to create a consistent, logical structure for your agreements. Among other things, this enables you to review them more easily and your reader to understand the final drafts better. You should, after all, be drafting so that your reader can understand your agreement.

As well, adopting the same general structure for all your agreements will result in better “horizontal” consistency, which will be of significant help in your future drafting.

Organizing Structure. Our experience in reviewing tens of thousands of agreements, sad to say, is that drafters spend precious little time in properly organizing their agreements. The proper approach is, of course, almost self-evident, namely that similar types of content should be kept together and similar issues addressed in the same part of the agreement.

But despite that principle, we frequently see the heading “Representations and Warranties,” for example, where the contents are a mish-mash of clauses thrown together in no discernible order. Not only is this not helpful, but it makes careful review of the contents extremely challenging. We have seen many instances of duplicate, and contradictory, clauses contained within such sections. This raises at the very least potential client service, if not professional liability, issues.

As well, simply having a “Covenants” section following “Representations and Warranties” does in itself demonstrate attention to organizational structure. Adopt a logical governing principle for structuring all the sections of your agreement. The most logical, in our view, is to adopt the approach of the financial statements: begin by addressing current assets, then contingent assets, current liabilities, contingent liabilities, and finally any other relevant matters.

Easily Identifiable Key Matters. While again this may seem self-evident, key business issues need to appear near the front of the agreement and need to be easily identifiable as such. If confidential information is being exchanged, this likely deserves its own treatment, and caption, not being buried somewhere in the “Covenants” section. Lawyers drafting agreements tend to place front and center legal issues that most concern them, whereas our clients, as business people, are most concerned with the business issues. Those issues need to be put to the forefront.

Numbering. Adopt an easy-to-understand numbering format and use it in all your agreements. The potentially confusing format “3.1.1.1,” for example, is not helpful for the reader’s understanding, whereas one such as “3(1)(a)(i)” will. Insure also that the various subcomponents are indented, and always to an identical degree at the same level.

Example. If you review our ContractStandards Base Agreement, you will be able to see many of our organizational principles in practice, all of which are then used in the other agreements we prepare.