In today’s modern society, people are more and more reliant on transactional relationships with third parties, whether it be in the form of a lease agreement, employment contract, supply agreement or a commercial transaction, such as a sale of business, sale of shares or complicated restructures.
These transactions often begin between people who have no pre-existing relationship and where there is no, or very little, automatic trust between them.
Unless required to be in writing by law, a contract exists whether it is in writing or not, however, for the purpose of certainty, it is advisable that a written contract is entered into in order to clearly record the relationship between the parties.
A written contract has two very specific purposes. Firstly, to record what the parties intend on achieving,and how they are going to proceed to do so, and secondly, to address the specific legal issues that apply to the type of transaction that the parties are involved in.
While many people are aware of the need for a contract to be recorded in writing, they are often hesitant to approach an experienced legal professional to assist in the drafting of their contracts, primarily because of the costs that may be involved in doing so. Instead, people often turn to the internet to get a “standard form” contract, which is often free.
The majority of these online contracts contain mostly what we refer to as vanilla clauses. These are clauses which only relate to the second important aspect that a contract must cover and that is the legal issues that need to be catered for in a particular commercial transaction.
However, a standard form contract will not properly deal with the what and the how of the agreement, which at the end of the day is the most important reason for entering into a written contract.
These contracts may accordingly cater for the legal issues, but most likely will not properly cater for the actual relationship between the parties.
Legal professionals, on the other hand, have knowledge of the specific law that will apply to a particular transaction and also have the expertise to put the what and the how that the parties wish to record into words that are certain and leave no room for differing interpretation.
A further benefit of approaching a legal professional is that they are trained to identify the risks in the required relationship which, more often than not, the parties do not necessarily have the ability to identify themselves.
It is of the utmost importance, that a contract is drafted correctly because if there is a problem between the parties a judge, magistrate, or arbitrator must be able to clearly determine and understand the what and the how, as well as the legal principles that apply to the relationship and to the transaction.
For any advice or assistance in relation to contracts, feel free to contact Malherbe Rigg and Ranwell Attorneys on 011 918 4116 or send an email to info@mrr.co.za
