Contracts – What to know


Contracts form the backbone of any business & corporate environment, everything hinges on drafting a strong contract to be complied with by the parties.

A contract helps people manage their relationships in a formal and legal way to avoid unnecessary conflicts and loss of business.

  • A contract can be defined as an agreement which intends to create a legal obligation between the parties.
  • The essence of a contract is that there should be an agreement (consensus/meeting of the minds) between the parties.
  • The agreement is normally constituted by one party making an offer and the other party accepting that offer.

Ensure that your Contracts are drafted:

  • Appropriately and with a full understanding of your business and the law
  • In easy and simple language
  • With clear and crisp clauses
  • Unambiguous provisions
  • Lucid and logical chronology
  • Ensuring a viable contract.

When drafting a contract, the following clauses should be highlighted:

  1. Indemnity (limit your indemnity or cap to a maximum amount)
  2. Insurance (ensure you have insurance cover for the required insurance, as per the contract)
  3. Liability (limited your liability to direct damages and cap your liability to a maximum amount)
  4. Breach (determine when you and the other party can be held liable for breach and what the consequences are)
  5. Disputes (how will disputes be determined)
  6. Duration of Contract (determine the duration of the contract and whether there are other clauses which allow for early termination)
  7. Termination (determine when and how the contract may be terminated)

Written by Cherine Hoffman

Director of CH Legal Consulting