What should be Written in Contract Drafting

1. TITLE

The  title  should  reflect  the  subject  matter  of  the  transaction  and,  if  appropriate,  the parties.

Example:

• License Agreement;
• Joint Venture Agreement;
• Franchise Agreement;
• Buy-sell Agreement
• Etc.

2. PREAMBLE (RECITALS)

Most  transaction  agreements  begin  with  some  form  of  a  preamble  that  identifies  the purpose  of  the  document  and  describes  the  transaction,  the  intent  of  the  parties  and any  assumed  facts  underlying  the  transaction.    The  preamble  identifies  the  parties and  the  date  of  the  transaction  as  well  as  the  nature  of  the  transaction.  In  many contracts,  this  appear  as  the  “whereas”  section,  in  which  all  of  the  statements  begin with that term.

3. DEFINITION

The use of defined terms can  simplify a document  immeasurably.   While the number and  extent  of  the  definition  section  depend  upon  the  nature  of  the  agreement, virtually all contracts will include some defined terms.

For example:

• Definition of Insurance
•  Interest
• Profit
• Letter of Credit
• Deposit
• Etc

4. OBLIGATIONS

I already explained about obligations before this article. You could searh that in column “What are you looking for….” about “How to Make a Contract, including Obligations in contratc law”.

• Pure Obligation;
• Conditional Obligation;
• With a period Obligation;
• Joint Obligation;
• Divisible n indivisible Obligation;
• With a Penal Clause Obligation

5. BREACH OF CONTRACT

In Civil Law System ( In Indonesia, KUHPerdata) breach of contract called WANPRESTASI

If the debtor does not fulfill obligation including:

• Not timely
• Not in accordance with the agreement previously

except in case of Force Majeure.

In the above conditions:

• There has been a violation of law, or against the law
  to the rights of the creditor (onrechtmatige daad) Art. 1365,
• Consequently, the debtor is required to pay compensation or debtor
  may request cancellation of the agreement.

Sanctions on the incidence of default to debtors who neglect
can be :

• Paying compensation
• The cancellation of the agreement (under favorable conditions / no detrimental to the debtor)
• The transition risk
• .Pay the court fee (if taken to court)

6. FORCE MAJEURE

Force  Majeure  –  an  “act  of  God”  which  prevents  one  party  from  performing the  obligations  owing  under  a  contract.    Commonly  such  things  as  war,  riots, earthquakes,  floods,  strikes  and  the  like  are  included.  The  common  law  generally takes a stricter approach to force majeure than civil law legal systems.

With the onset of “force majeure”, then A portion or all of the agreement in the contract can not be held. No person was charged with the responsibility or risk for failure or delay the settlement of the obligations under the contract.

7. CHOICE OF LAW

Choice  of  Law  –  often,  the  parties  to  a  contract  will  specify  which  rules  of law should be used to resolve any dispute between them.  Particularly in international transactions,  the  choice  of  law  can  be  a  significant  point  of  negotiation  among lawyers.    Choice  of  law  (what  legal  principles  will  be  used  to  resolve  the  dispute) should be distinguished from choice of forum (where the dispute should be resolved) and choice of dispute resolution method (litigation or some form of ADR).

8. DISPUTES RESOLUTION

All  disputes  arising  from  this  contract  shall  be  finally  setlled  under  the Rules  of :

• Litigation Process (court)
• Non Litigation Process (Negotiation, Conciliation, Mediation or  Arbitration)