Avoiding Common Contract Drafting and Review Mistakes for a Smooth Deal

Avoiding Common Contract Drafting and Review Mistakes

Contracts are the lifeblood of any business agreement. They define expectations, protect rights, and pave the way for smooth collaboration. However, inadequacies in contract drafting and review can lead to costly misunderstandings, disputes, financial losses, legal battles, and damage to business relationships. Whether you’re a seasoned business owner or navigating your first agreement, ensure your contracts are watertight and serve their intended purpose.

Research about contract management processes reveals:

  • 91% of businesses reported experiencing contract-related issues in the past year. (Juro)
  • 75% of businesses report having experienced negative consequences due to poorly drafted contracts (Juro, 2022).
  • The average cost of a contract dispute in the US is $29,000 (American Bar Association, 2022).
  • Inefficient contract management can cost businesses 9% of their annual revenue. (Docupace)

So, how can you ensure your contracts are clear, concise, and legally sound? Let’s delve into the most common contract drafting and review mistakes, and equip you with strategies to avoid them.

Mastering Contract Drafting and Review: Solutions for Common Mistakes

Mistake #1: Legalese Labyrinth – Obfuscation over Clarity

Have you ever encountered contracts resembling ancient scrolls, dense with legalese and jargon? This obfuscation is a recipe for disaster. Remember, the goal is clarity, not intimidation. Legalese and technical terms can create confusion and misinterpretations.

A recent study by Juro found that 42% of businesses admit to having inconsistencies in their contract language, creating confusion and potential risks.


  • Plain language is your friend: Opt for simple, concise sentences and avoid legal jargon unless necessary. Define any technical terms used.
  • Active voice wins: Passive voice muddies the water. Use active voice for clear attribution of responsibilities.
  • Consistency is key: Maintain consistent terminology throughout the contract to eliminate confusion. Read the contract aloud to identify unclear or complex areas.

Mistake #2: Incomplete Coverage – Overlooking Crucial Elements

Assuming every possible scenario is unrealistic, neglecting key elements leaves your contract vulnerable. Imagine a recipe missing crucial ingredients. Your contract suffers the same fate if essential terms are absent.


Essentials checklist: Ensure the contract clearly defines:

  • Parties involved and their roles
  • Subject matter of the agreement
  • Key obligations and deliverables
  • Timeframes and deadlines
  • Payment terms and conditions
  • Termination clauses and dispute resolution mechanisms

Tailor, don’t copy-paste: Resist the urge to adopt a generic template simply. Customize the contract to reflect the specific agreement’s nuances.

Mistake #3: Ambiguity Reigns – Leaving Room for Misinterpretation

Vague language is a breeding ground for disputes. Double-check for any clauses open to multiple interpretations.


  • Specificity matters: Be clear and specific about expectations, avoiding terms like “reasonable” or “best efforts” without defining them.
  • Scenarios and examples: If necessary, illustrate key clauses with concrete examples to clarify intent.
  • Hypothetical test: Ask yourself if both parties would understand the meaning in any situation.

Mistake #4: Proofreading Panic – Ignoring Typos and Errors

Typos, grammatical errors, and formatting inconsistencies may seem trivial, but they can create ambiguity and undermine the contract’s enforceability.


  • Proofread meticulously: Review the contract multiple times, paying close attention to details. Leverage spell checkers and grammar tools, but don’t rely solely on them.
  • Fresh eyes matter: Ask a colleague or external party to review the contract for errors and clarity.
  • Version control: Maintain explicit version control to avoid confusion due to multiple drafts.

Mistake #5: Going Solo – Neglecting Professional Guidance

While basic contracts might seem manageable, complex agreements warrant legal expertise. Drafting and reviewing complex contracts without legal expertise can lead to overlooking crucial legal nuances and potential risks.

According to a report by Docupace, 73% of businesses lack a formal contract review process, increasing the risk of errors.


  • Seek legal counsel: When dealing with intricate contracts, involving a lawyer helps ensure compliance and protects your interests.
  • Industry-specific considerations: Consider lawyers with expertise in your industry for specialized agreements.
  • Negotiation support: Lawyers can guide you through negotiations and ensure clauses accurately reflect the agreed-upon terms.

Mistake #6: Lack of Flexibility

The legal landscape constantly evolves. Contracts drafted must consider potential changes in circumstances to avoid becoming inflexible and hindering future collaborations.

A study by Docupace revealed that 60% of businesses are adopting new contract management technologies, highlighting the increasing focus on efficiency and risk mitigation.


  • Stay informed about recent changes and legal precedents that might impact your contracts. Include clauses addressing potential changes, such as termination, dispute resolution, and amendments.
  • Regularly reviewing and updating contracts as circumstances evolve ensures your agreements remain effective and compliant.

Mistake #7: Neglecting Counterparty Concerns

Neglecting counterparty concerns in contract drafting can lead to misunderstandings, disputes, and strained relationships. Considering and addressing the interests and needs of all parties involved is crucial for fostering collaboration and ensuring the enforceability of the contract.


  • A good contract considers both parties’ interests and concerns. Actively listen to your counterparty’s feedback, negotiate constructively, and aim for a mutually beneficial agreement that fosters trust and collaboration.

Mistake #8: Forgetting Post-Signing Management

It may lead to overlooked obligations, missed deadlines, and increased risk of disputes, jeopardizing the effectiveness and integrity of the contractual agreement.


  • Contracts should refrain from gathering dust after signing. Regularly review and update them as needed to reflect changes in circumstances, project progress, or legal requirements.
  • Consider using contract management software to streamline this process.

Mistake #9: The Negotiation Gap – Failing to Document Key Points

The Negotiation Gap, particularly the failure to document key points in contract drafting, raises concerns as it leaves room for misunderstandings and disputes and undermines the clarity needed for successful contractual relationships.


  • Thorough documentation is essential to bridge this gap and ensure mutual understanding between parties.
  • Keep detailed records of key discussions, agreements, and concessions made during the negotiation process. These records can be invaluable if disputes arise later.

Mistake #10: Ignoring Applicable Laws and Regulations

Staying updated on industry-specific laws and regulations is crucial to avoid legal consequences, maintain ethical standards, and adapt strategies for sustained business success in a dynamic legal landscape.


  • Regularly update contracts to align with the latest legal requirements.

Mistake #11: Overlooking Dispute Resolution Mechanisms

Disputes are an unfortunate but inevitable aspect of business. Ignoring crucial aspects like dispute resolution mechanisms can lead to prolonged and costly litigation.


  • Contracts should include well-defined dispute resolution mechanisms, such as arbitration or mediation, to expedite the resolution process and minimize legal costs.

Bonus Tips:

1. Use Contract Management Software

Embrace technological solutions to streamline the contract management process. Contract management software can assist in drafting, reviewing, and storing contracts securely. These tools often include features such as automated alerts for contract renewals and updates, reducing the risk of oversight.

The use of contract management software is projected to grow at a staggering 12.1% CAGR by 2027. (Grand View Research)

2. Invest in Legal Expertise – Outsource your Contract services

Employing legal professionals or seeking legal advice during the contract drafting and review process is crucial. Legal experts bring specialized knowledge and experience, helping to identify potential pitfalls and ensure the contract aligns with legal standards.

Incorporating outsourcing into your contract drafting strategy can be a game-changer for businesses seeking to optimize their operations, reduce costs, and enhance the overall quality of their contracts. By leveraging the specialized expertise, scalability, and technological advancements offered by outsourcing partners, businesses can confidently navigate the complexities of contract management.

Investing time and resources in proper contract drafting services can save you significant time, money, and stress in the long run. By following these tips and leveraging available resources, you can ensure your contracts are clear and concise and protect your interests effectively.