Canadian Business Contracts Handbook. Nishan Swais
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supposed to come and pick it up.”
“But,” you respond, “you were supposed to deliver it to me.”
“I am delivering it to you,” the baker might say, “ … at the store. Come and get it.”
Or the baker might respond, “I thought you were going to hire someone else to deliver it to you. Look at the contract. Where does it say that I would be delivering the cake?
The fact is, the contract doesn’t say that. Who is responsible for getting the cake to the wedding?
That question is as difficult for us to answer as it is would be for a judge if the dispute ever went to court. This is because, as you will learn, the law enforces agreements and, in this case, there is no agreement. The unfortunate outcome is an unhappy bride, a stain on your business reputation, and the beginning of a sizable ulcer for you — all of which you might have avoided with a good contract.
You can write that contract. Consider the much better position you would have been in had you drafted the contract to say:
b) The baker will deliver the cake to the caterer at the reception hall located at 123 Montgomery Street, Salmon Arm, at 10:00 a.m. on June 11, 2012.
There is not a lot of room for misunderstanding here. Through the use of language, you have now clearly established what the baker will be doing, where, and when. Simply by describing the events of delivery more precisely, you have gone a long way to ensure greater certainty in the conduct of your business affairs. As well, a court will have a solid basis on which to decide any dispute with the baker in your favour. It is in this way that knowing how to write your own business contracts can contribute to the success of your business.
2. What Will This Book Teach You?
The goal of this book is to teach you how to write your own business contracts. For easy reference, it is divided into four parts.
2.1 Part I: Understanding contracts
We begin by teaching you what a contract is, what it does, and what it looks like. Our focus will be on business or commercial contracts (as they are also commonly referred to) and the law concerning how they are formed and what makes them enforceable. This will help to take the mystery out of writing your own contracts, which for most businesspersons is the largest psychological hurdle to overcome.
Although Part I presents a good deal of contract law and theory, it remains practical by giving many examples and straightforward explanations. Concepts such as performance, privity, and breach, which may be unfamiliar to you now, will become important for you as you take the first steps toward learning how to write your own business contracts.
2.2 Part II: The formal elements of a written contract
In Part II, you will learn the formal elements of every written business contract and how to properly make use of them when writing your own. These elements include the date, the parties to the contract, and what are known as the contractual terms, which refer to the rights and obligations set out in the contract.
As part of our consideration of the terms, we will take a special look at “limits of liability” in order to consider how they operate to contractually reduce or eliminate your exposure to certain kinds of legal claims.
Finally, we will consider those terms that are often derisively referred to as the boilerplate. The boilerplate, as you will learn, is simply language that, because of its broad legal applicability and significance, can be found in almost every contract. We discuss what the boilerplate is, provide examples, and show you why the derision is misplaced.
2.3 Part III: The elements of style
In Part III, you will learn the elements of style that you will need to follow in order to produce a contract that best enhances and protects your business interests. These elements of style are the practical rules of writing business contracts that are second nature to a commercial lawyer and well worth learning by any well-prepared businessperson. How well you follow these rules will often determine how good a contract you will have written and, hence, how well you have addressed your business interests.
We illustrated the use of one such rule earlier in this chapter: namely, write in the active voice. To the untrained eye, there is little difference between the phrases, “The cake will be delivered.” and “The baker will deliver the cake.” As you saw, that subtle difference can make all the difference in the world where the success of your business is concerned.
2.4 Part IV: Final considerations
The fourth part of this book begins by looking at the finishing touches that go into any well-written business contract. This includes taking the steps of editing and proofreading your contracts so that they are ready for delivery and signature.
We then consider the flip side of everything that has come before in looking at how to read a contract as a commercial lawyer would. This skill is important because you may not always be in a position to write the first draft of the contract you want to sign. Reading a contract is also the first step in changing a contract by rewriting it to say what you want it to say.
We also consider how to formally change or amend a contract that is already in effect. For example, the services contract you signed last year lists your hourly consulting rate at $200. If you want to amend that contract to reflect your new hourly rate of $250, you will need to prepare and sign an Amending Agreement. This book shows you how to do so.
We conclude Part IV and, with it, the book, by briefly touching on the creative element present in writing contracts. Many lawyers will tell you that what is not said in a contract is often just as important as what is said. Learning to read between the lines — and write between them — is an important skill to acquire for those who truly want to “take it to the next level.”
3. Who Is This Book for?
This book is written specifically for you, as a business owner, operator, or manager. It is designed to address your needs and is intended for you to use in your day-to-day business affairs. By reading this book and adopting its principles, you will be taking a step to ensure the ongoing success of your business.
In addition to teaching you how to write your own business contracts, this book can also be useful to you in your other business communications:
• Correspondence: Letters, email, and similar types of communications to and from clients, customers, suppliers, and others, frequently contain information and statements of legal significance. It is important to you and your business that your words clearly and accurately communicate your intentions.
• Communications with government: Every business, regardless of size, will have extensive dealings with governmental authorities and agencies. From simple government filings to complicated administrative proceedings, it is important for you to know how to communicate with government in a way that protects your business interests. As anyone who has had to navigate the murky waters of bureaucracy knows, one wrong word can cost you significant time and money.
• Judicial proceedings: At some point, almost every business finds itself dealing in one way or another with our court system or other judicial or administrative body. You may sue; you may be sued. You may simply be asked to serve as a witness in connection with a legal proceeding unrelated to you. The point is, the judge is interested in what you have to say, and what you have to say (or what you may have already said) must often appear in written form.
No one will ever win a literary award for writing a great contract, and no contract will ever be mistaken for a great book. However, a great contract can definitely contribute to the success of your business. That, ultimately, may one day be worth writing a book about.
A final note of caution: This book is not intended