One may keep stressing that the contract should be accurate and elaborate until the hell freezes over, however experience shows that 70% of entrepreneurs begin to understand the difference between correctly and incorrectly-drafted contract only after having faced with a number of problems.
What are the hidden traps in a contract?
If you recall the “Gas Agreement” between Ukraine and Russia, to Ukrainians it was presented as a complete victory of our negotiators. But what was the actual reality? Basically, this agreement could be described as follows:
Clause 1. Gazprom is always right.
Clause 2. If it is not, please see Clause 1 above.
The traps in this particular agreement include, among others, a non-transparent and very tricky pricing mechanism which opens the way for manipulation, one-sided take-or-pay formula which forces the buyer to pay for a certain amount of product regardless of its purchase under any circumstances whatsoever.
Any draft contract may hide a number of traps which need to be promptly identified and eliminated, i.e. prior to its signing.
Speech is silver, but silence is gold.
This fine proverb certainly does not apply, when it comes to contractual relations. The silence is sometimes a lot more dangerous than the speech itself. This can be illustrated by infamous Budapest Memorandum intended to provide Ukraine with security assurances in connection with its accession to the NPT as a non-nuclear weapon state. But here's the catch: we have an assurance but no clear implementation arrangements. Nothing is really agreed or prescribed. As a result, the subscribers are free to interpret their commitments as they deem fit, naturally, to their benefit. The one who is left holding the bag does not have to be named.
A smart man learns from his mistakes. A wise one learns from the mistakes of others. Being wise is cheaper.
When drafting the contracts, our professionals take into consideration every little detail, from legislative requirements to specific nature of the contact and its possible consequences, including those associated with taxes.
We offer our clients the following services:
1. Analysis and drafting of the contracts of any complexity, with due consideration of the focus area.
2. Alteration, modification, termination and invalidation of contracts.
3. Contract enforcement.
Logic and common sense are not enough to draft an accurate and seamless contract. One needs to be well-versed in the nuances of the legislation and the very nature of the contract.