Contract Drafting – Beware of Precedents! (from beginning to end and beyond)

“The employee’s option will expire at 12:00AM on January 1, 2014”.  This is simple and clear contract language, right? Wrong.  Even this apparently straightforward language can be interpreted in different ways. Last week we attended a seminar where a world renowned contract drafter, Kenneth Adams, reminded us of the many ways ambiguity can creep into a contract and how important it is to draft contracts clearly and carefully. From the perspective of a litigation lawyer, contracts are often at the centre of disputes.  For example, the parties to a contract may disagree about how a certain issue is to be handled, or one party may feel that the other party broke the agreement.  Returning to our earlier example, if the employer and employee are in different time zones a dispute may arise over the question of which time zone 12:00AM refers to.  If this simple sentence was found in a contract as is it could result in future disputes and even trial. When disputes arise, having taken the time (and yes, having spent the money) to have a well written contract drafted can prove beneficial.  A well written contract can help to eliminate the need for costly arbitration and trials, and can also help to identify the consequences for a breach of contract.  A contract based on a precedent with a fill in the blanks mentality can lead to ambiguity, confusion or even contradiction, and open the door to litigation disputes.