Anatomy of a Contract – Introduction

This is the first in a series of articles walking through the anatomy of a contract.  The intent is to demystify the various components/legalese that comprise a contract.

Clients often draft and sign contracts without advice of counsel.  Such agreements typically do a good job in summarizing the business deal but frequently contain nothing else.  While it is critical for contracts to memorialize the business terms, it is equally important to specify the mechanism to enforce those terms and how the text should be interpreted.  Without specifying such a mechanism the parties are subject to the applicable default legal provisions, which may have unintended consequences.

It is also important to understand what law will apply to a transaction.  For example, sales of goods are covered by Article 2 of the Uniform Commercial Code of the applicable state.  Service contracts are generally subject to common law decisions.  Equipment leases may fall under Article 2A of the Uniform Commercial Code.  However, if the lease is actually a secured lien it may fall under Article 9 of the Uniform Commercial Code.  Real estate transactions (leases, mortgages, etc.) are not covered by the Uniform Commercial Code and different rules apply for commercial and consumer transactions.

Once the relevant body of law is identified, it is important to identify which state’s law applies and where the litigation (or arbitration) will be conducted.  Other contract interpretation rules address the agreements of the parties that comprise the contract and those which should be excluded.

Contracts can be over-lawyered.  However, it is useful for clients to understand the general layout of a contract to avoid being intimidated by the legalese and to know when to get help of counsel.   These issues will be discussed in subsequent articles.

If you have any questions about the above or your contracts please contact us.

The commentary, information, and analyses conveyed on this site by the authors do not constitute legal advice and shall not be construed as such. Entires may or may not be updated following the time of original posting. By using this site, you understand that the information contained is not provided for the purpose of rendering legal advice. Your use of this site does not create an attorney-client relationship.

Subscribe to our blog by Email

Follow DevenKane on Twitter

Share