The parties should familiarize themselves with the key laws and regulations governing the contract, its subject and its parties, as any violation may lead to the nullification of the contract. The parties should determine the commercial terms upon which they have agreed, and state them clearly and properly in their contract.

It is also important for the parties to identify and assess the risks associated with the contract and take the necessary measures to mitigate or deal with such risks. They should also put an exit strategy in place through which the contract may be terminated with the least possible loss and expense. Although this may not always be possible, it should always be considered.

The contract should clearly reflect all the critical dates relating to the transaction, such as the signing and commencement dates, which should be linked to the term of the contract and any other relevant dates. The contract should also include full details of the contracting parties, such as their full names, licensing numbers, current addresses to which communications, notices and summons may be sent if the need arise, as well as details relating to their authorized legal representatives (such as the general manager if the party is a company.

The subject of the contract (whether it is a service or an asset) and all the terms relating to the delivery of such service or asset should be properly described in the contract in order to eliminate confusion or disagreement. All the terms relating to the consideration should be stated, including the amounts, installments, dates of payment and the method through which payments are to be made.

Whenever possible, specific provisions relating to termination of the contract should be linked with the contracting parties’ exit strategies, which will in turn relate to the risks which the parties identified prior to signing the contract. This should include whatever remedies, warranties, securities (such as postdated cheques, performance bonds, guarantees, pledges, mortgages and indemnifications) the parties make to each other. Furthermore, any undertakings and obligations which were agreed verbally should be recorded in writing.

Following the signing of a contract, parties often fail to either understand or to identify or perform their obligations properly in accordance with the contract, or even to follow up on their rights as stipulated in the contract. Sometimes they fail to maintain proper records of everything relating to the contract, including but not limited to the correspondence exchanged between them. Often they seek merely to rely on verbal discussions or to assign the contract to an inexperienced team member to oversee its proper execution. All this should be avoided.

The above considerations will not entirely prevent contractual disputes, but they can greatly contribute to reducing the chances of dispute arising and may help to mitigate the risks and losses associated with any contract.

Authored by Mojahed Al Sebae

Mojahed Al Sebae Legal Consultancy
For any queries, please address them to: [email protected]