Contract drafting is essential in helping capture the purpose of a contract in written form. Haphazard drafting of a contract can result in pushing outdated contract versions to collaboration and negotiation. Additionally, the lack of a centralized and informed process can result in incorrect language being introduced into the review process. Unfavorable terms, missed obligations, and legal disputes can follow.
To help you avoid these consequences and more, here are five practical contract drafting tips for more effective contract management.
Contract drafting is a form of legal drafting meant to capture the purpose of a contract. Terms and conditions and other contract provisions are put on paper. Contract drafting should clearly express the deal or agreement being made and the contractual obligations of all parties.
Contract Drafting Tips
Now that we’ve defined contract drafting, let’s look at some contract administration tips to quickly improve your drafting process.
#1 – Don’t Forget Contract Templates!
No corporate counsel, procurement professionals, business owners, business law firms/law practices, contract lawyers, or even small businesses should approach contracts without contract template functionality – period!
You should leverage contract management software that enables you to create virtually unlimited contract templates to help quickly generate:
- Contracts & Agreements
- Employment Contracts
- Purchase Orders
- Contract Requests
- Solicitations & E-Procurement Documents
- Vendor Contracts
- Counterparties & Customers Contracts
With standard contract templates, your organization can quickly commence contract authoring. You can seamlessly map critical metadata into documents such as consulting agreements, software agreements, MSAs, terms of service, agreements for employment laws, commercial contracts, confidentiality agreements, and even specialized contracts (like real estate agreements) with contract clauses and sections.
For a truly one-of-a-kind contract management experience, leverage an AI-based CLM software provider that has learned from a million real-life contract clauses, including:
- Intellectual Property Clauses
- Assignment Clauses
- Confidentiality Clauses
This feature can allow your system to recognize clause types with ever-increasing accuracy. Additionally, your team can feel free to add clauses one-off to your contract AI engine to foster further machine learning.
#2 – Consider a Secure Contract Repository
A secure contract database is essentially a must-have for your contract drafting process.
With a centralized contract repository, you can store virtually unlimited pre-approved clauses, standard clauses, alternative clauses, fallback clauses, and others for drafting. No longer does your team need to worry about hosting your clauses on local servers. Instead, you can leverage a contract database that is entirely web-based!
Your secure repository can be leveraged for a variety of purposes. Seamless, rules-based clause inclusion can help you easily generate new document templates.
Your contract clause library can also be leveraged as a repository for contract language – as alluded to above. Your contract review and approval personnel can access and seamlessly insert clause language as redlines during contract drafting. These clauses can be added one-off or in bulk as needed to your CLM system.
#3 – Embrace Web-Enabled Online Document Editing
Contract creation and drafting can be simplified in the age of digital transformation with web-based online contract editing functionality. Advanced contract management software supports in-system, web-based, collaborative contract editing. Online contract drafting functionality can afford your team low-friction and unified collaboration with the ability to create new documents directly from contract record information pages, import new contracts, and edit existing contract documents.
During contract drafting, you can easily insert clauses from your pre-approved library into an online document editor. Files can then be automatically attached to relevant contract record pages. Edits made to documents can automatically be tracked as new versions for the governance of versions and audit trails. Best of all, this contract drafting success can be attained fully online!
#4 – Prepare for Worse During Contract Drafting
You and I would like to think that contracts and business relationships will always run smoothly. However, this is sadly not the case. That’s why school-of-law general counsel and business contract administrators alike should prepare for the possibility of contract termination as early as the contract drafting phase.
Your team can dynamically draft contract termination letters with contract management software. You can generate and leverage termination templates within your template library. Your dynamic clause library can help you pull in legal clauses (such as those pertaining to breaches of contract, dispute resolution procedures, and early termination fees) if they are needed. Contract termination materials can be easily drafted so that a soured or otherwise fruitless business engagement can be relinquished with ease.
#5 – Integrate Contract Drafting With Other CLM Processes
Your contract drafting process functions best when paired with later contract lifecycle stages. Advanced contract software solutions allow your team to integrate contract drafting with:
- contract negotiations, collaboration, review, and approval with clause ownership, contract drafting, and the user-friendly connectors mentioned above.
- contract analytics and reporting from contract drafting to renewal.
- automated key date notifications and alerts – including for approvals, obligations, and renewal dates.
- thorough risk management and risk analysis.
- compliance searching and reporting.
- the ability to sign documents online via a user-friendly, secure, and trackable process.
- alerts and workflows to renew, report on, and engage with signed contracts easily.
Legal Contract Drafting & So Much More, Today
Now that you know how to supercharge contract drafting – and other stages of the contract lifecycle – it’s time to get started with the contract management tools above and more. There is one solution with all of the tools mentioned above and so many more to electrify your contract drafting and CLM processes. To explore CLM software options, download this complimentary CLM software report.
To see future-minded contract lifecycle management software in action, click here.