Seven Key Questions to Ask Your Client Before Drafting The Contract

Before drafting the contract, it is very important to understand the nitty gritty of the transaction from the client so as to ensure that the contract is unambiguous and covers all the important aspect of the transaction. Often the questions raised by the lawyers enlightens the client about possible situation which can arise pertaining to their peculiar transaction. Therefore, it is important to ask your client the Following questions before drafting the contract:

Understand the intention of your client behind the contract.

The first and foremost thing to learn from the client before initiating the contract drafting is the ultimate intention of the client behind entering into and executing the contract. It is important to get a clarity on this aspect as the entire genesis of the contract will depend on this. Understanding the scope of the contract from the client before drafting the contract will save time and effort of both the lawyer and the client.

Time frame/ Term/ duration of the contract.

It is always advisable to ask the client about the term or duration of the contract beforehand only, as many important clauses of the contract are drafted keeping in mind the term of the contract. After deciding the term or duration of the contract, it is easy to define other important dates mentioned in the contract such as commencement date, effective date, etc.

Occurrences which result in termination of the contract.

It is vital that the client shall discuss with the legal consultant or the advisor about the events which will lead to the termination of the contract. Ample of times we come across such agreements which does not even have the termination clause or the termination right is reserved with only one party. Understanding the client’s perspective about the termination always helps in drafting the clause to its true sense.

Selection of Dispute Resolution Forum.

Often our clients are unaware of the implications of their choice of dispute resolution forum and therefore, it is important to discuss with them the dispute resolution clause. For example, arbitration as a remedy for dispute resolution will not be suitable for an individual executing a contract for his/ her small business as arbitral proceedings are expensive. On the other hand, if the client is big corporate house, wherein time is money, arbitration will be the best suited option as it consumes less time as compared to normal court proceedings.

Possible conflict that may arise from transaction for which the contract is executed.

It is always wise to understand from the client about the possible conflicts or issues that may arise due to the nature of the transaction. Having this information beforehand helps the lawyer to incorporate such clauses in the contract which provides remedies whenever such conflict or dispute will arise. This ensures that rights of our client is protected under all the circumstances.

Ownership of the asset when the term is over or in the event of termination.

The client should decide in advance about the ownership of the asset involved in the transaction. It is very important to lay down clearly in the contract about the ownership of the asset so as to know unambiguously who will own the asset after the end of the term of the contract or in the event of termination of the contract. One of the common dispute which we encounter frequently is the poorly drafted contracts wherein there is no clarity on asset ownership, which often forces the parties to knock the door of the courts.

Payment schedule and actions to be taken on non-payment.

It is prerequisite to ask the client about the schedule of the payment for the services rendered as per the terms of the contract. Also, the client should be able to decide what step he/ she is required to take in case of non-payment of the fee. We come across so many agreements which provides no remedy for late payment or delayed payment. In order to minimize the loss, it is important to ask client about the payment terms well in advance and further suggest them the option of recovery in case of delayed payment.