By Fiona Robertson
Fiona Robertson from the Rights Lawyers shares some terrible contract drafting from the past year, while pleading with you to ensure that your key contracts are at least read by a lawyer - if not preferably written by one.
With economic times still making heads spin across the globe, this is a good time to consider the accuracy of the contracts that employees are signing on behalf of your company. Consider, for a moment, the ramifications of contracts.
They provide the parties with a clear pathway for the relationship that is being entered - not only the agreements on price and supply, but how the parties interact and plan, how they can walk away and who is responsible if it goes wrong. If a contract is done badly (or worse, not done at all) the relationship can become difficult, you may not have an avenue to seek the payments due to you and the whole thing will then head to an inevitably messy termination.
We know that, sometimes, as the boss pushes for closure of the deal, little mistakes can creep in. We know that sometimes, asking a lawyer to look at a contract feels like an expense. You sign a contract even though it is full of little mistakes. You sign a contract even though it contains many bad commercial terms. Sometimes, you sign a contract even though it appears to be written by a two-year old chimpanzee brandishing a crayon!
Here are my favourite clauses: each actually signed by someone in the past 12 months. They represent some of the common errors that are made in contract and I hope you enjoy them, then call me tomorrow to check your latest draft agreement!
•A local company did this year agree to "insure to make all the necessary actions to correct the uncorrect". So if anyone has any "uncorrects" in their life, please let me know as I know a company that has a contractual obligation to correct them. All of them. For everyone.
• This year, a local company was told by a law firm based in the United States that the country was defined as "the world outside of the Middle East". Anyone got a comment on that?
• I know a company that has agreed to "be in charge of any lawsuit for a third party for any violation from that firm to any Bertip invention". It's good to have that covered.
• Sometimes, when things get confusing in a contract it is comforting to read that "UAE law will explain everything about this agreement". When you read something like that, you can be sure that you will let anyone try to explain something about the agreement.
• It is always good to include a clause that says that the agreement covers all issues relating to the subject matter of the agreement. I assume this was the intention when a party agreed that "this agreement is everything has been done between the teams and everything else is not acceptable". I wonder if they meant to try exclude the operation of the laws of the country they operate in, or if that was accidental?
• "The second party", it said "undertakes that they will not request termination of this agreement, but in the event that they do wish to do so during the term then ...". So they can't terminate, except when they can. Good start. Then "the First party has the right to claim and the second party agreed to pay Termination Administration Fees equivalent to 5% of the total worth of five years fees as per Schedule 3". Finishing with the sentence: "To avoid any confusion, this amount shall be AED250,000". Truly, if the drafting lawyer wanted to avoid any confusion, they perhaps should have thought about choosing another career path.
• And so we come to the gold winner for 2009. Nightly I watch the skies for my client who signed a contract allowing him to "rent and sail the space gods".
As lawyers, we really do understand that your contract signing is often driven more by commercial imperatives than by accuracy. But I beg of you, please get a lawyer to read what you sign. Bad language, incorrect phrasing and inconsistencies are great for a laugh, but in the long run each of these matters were difficult to unravel because of the uncertainty created by the bad contract. An hour now may save you much argument later and possible litigation later on.