Explanation and Guide

Form: Basic Checklist to Skillful Drafting

Purpose: This is a general checklist of key items to consider when

drafting a contract. Depending on the contract, some of
these may be inapplicable. Other provisions not included
here may be appropriate for specialized contracts.
Notes: The law defines contract as “a meeting of minds between
two persons whereby one binds himself, with respect to
the other, to give something or to render some
service.”[Article 1305 ; Civil Code of the Phils.] A
contract embodies the agreement between two persons. It
is binding upon them and it has the force of law between
them. The language of a contract must therefore be clear
in such a way that it would reflect the real intent of the
contracting parties. If the words of the contract appear to
be contrary to the evident intention of the contracting
parties, the latter will prevail over the former. [Lustan vs.
Court of Appeals (G.R. No.111924 27 January 1997)]

Entering into a written agreement is a serious

undertaking. It is advisable to refer to a basic check list
before an endeavor to draft a contract. A basic check list
is intended as a guide for contract drafting to insure that
the standard provisions are incorporated in the written
agreement, or at the very least, consciously dispensed
with, and not because of oversight.
This is a checklist intended as a guide for skillful contract
drafting. Its objective is to ensure that the standard
provisions that should generally be incorporated in an
agreement are not inadvertently omitted.
 Basic Checklist to Skillful Drafting

 Identity of Parties

 Name
 Type of entity of each party (corporation, LLC, etc.)
 Addresses

 Recitals

 Background of agreement
 Purpose for entering into the contract
 Key assumptions for the contract

 Obligations of the Parties

 What is each side required to do?

 By what date?
 If something has to be delivered, whose obligation is it and at whose cost?

 Terms of the Contract

 Is the contract a one-shot situation or will it last for some designated time period?
 How can the term be renewed or extended?

 Price

 What is the price for the product or service?

 Is it a fixed price, determined by a formula, by a project fee, or some other manner?
 Who pays any tax?

 Payment Terms

 When is payment due?

 Will there be installment payments?
 Will interest be charged?
 Is there a penalty for late payment?

 Representations and Warranties

 What representations and warranties are to be made by the parties?

 Are certain warranties disclaimed (e.g., merchantability or fitness for a particular purpose)?
 How long are any warranties good for?

 Liability

 What limitations of liability exist (e.g., no liability in excess of payment received, or no liability for consequential
damage or lost profits)?
 Under what circumstances is one party liable (e.g., material breach of agreement or grossly negligent in
performing services)?

 Termination of Contract

 When can one party terminate the contract early?

 What are the consequences of termination?
 What post-termination obligations are there?
 Confidentiality

 What confidentiality obligations are there?

 What are the exclusions from confidentiality?

 Default

 What are the events of default?

 Does a party have a period to cure a default?
 What are the consequences of a default?

 Disputes

 How are disputes to be handled – litigation, mediation or arbitration?

 If arbitration, what rules will govern? (e.g., JAMS/Endispute or the American Arbitration Association)
 If arbitration, how many arbitrators and how will they be picked?
 If arbitration, will there be procedures for discovery and what the arbitrator can and can’t do?
 If litigation, where can or must the litigation be brought?

 Indemnification

 Is there indemnification for certain breaches or problems?

 What is the procedure required to obtain indemnification?
 Is there a cap on or exclusions from indemnification?

 Miscellaneous

 Governing law
 Attorneys fees
 Modification of Agreement
 Notice
 Entire Agreement
 Severability
 Time of the Essence
 Survival
 Ambiguities
 Waiver
 Headings
 Necessary Acts and Further Assurances
 Execution
 Jury Trial Waivers
 Specific Performances
 Representation on Authority of Parties
 Force Majuere
 Assignment

 Signatures

 What authority is required for one party to sign the contract (e.g., Board of Directors approval)?
 How many signatures are required?
 Are the signature blocks correct? For corporations, this is a typical appropriate signature block:

By:______________________________________