All the areas of our business law practice are connected by the common threads of contract law and contract drafting, areas in which our lead business attorney, Michael Smith, has acquired extensive experience and skill, beginning with the years he spent in the commercial transactions and securities groups of the Eli Lilly and Company law division. Mr. Smith also developed an extensive library of contract templates for use by the company’s procurement professionals, including instructions for negotiating contracts and alternative clauses that the procurement professionals could use as counterproposals in negotiations or to tailor contracts to specific situations. From 2010 to 2012, Mr. Smith taught contract drafting to law students as an adjunct professor at the Indiana University Robert H. McKinney School of Law. He also taught a continuing legal education seminar on business contracts, and he developed and taught a multi-day training course in contract law and negotiations for Lilly's global procurement organization.
Look for the legal meaning of the word "contract," and you may find a definition that describes the elements that are necessary to create a contract: The parties must have the legal capacity to enter into a contract; there must be an offer and an acceptance; and there must be something called “consideration.” All that is correct, but the fundamental definition is much simpler than that. A contract is a promise that a court will enforce, usually by awarding monetary damages to one party when the other party fails to keep its promise.
It’s that simple, but it’s also very important for contract attorneys to keep that in mind when they write contracts because it tells them who they are writing the contract for. A contract – or at least a good contract – is written primarily for a judge or jury who may be called on to decide whether a party broke its promise and, if so, how much the other side was damaged. Interestingly, however, a good contract that is written with a judge or jury in mind is less likely to ever be seen by a judge or a jury because the parties will be able to read it and understand what they must do to comply, in turn making it less likely that the contract will be breached. Then, if one party does breach, a well-written contract makes it easier for the parties' lawyers to predict what a judge or jury would do if the dispute were to be litigated, which facilitates the settlement of disputes outside of court.
Unfortunately, it sometimes seems as if some contracts are all but impossible to read. For example, most business contracts begin with “recitals” that are frequently filled with all sorts of flowery legalese, often in the form of a bunch of clauses, each beginning with “WHEREAS,” and finished off a recitation of consideration, something like this: “NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:” We believe that language like that is unnecessary and that it just gets in the way.