Revise Contract Provisions - Next Generation Bar Exam
- What drafting language most clearly creates an express condition?
- Language such as 'only if,' 'on condition that,' or 'provided that'. Courts interpret doubtful language as a promise rather than a condition.
- A liquidated damages clause sets $1 million for any breach of a $50,000 service contract. What revision is needed?
- Reduce the amount to a reasonable estimate of anticipated damages. A grossly disproportionate amount is an unenforceable penalty.
- What is the difference between a condition and a covenant in a contract?
- A condition is an event that must occur before a duty arises; a covenant is a promise to perform. Failure of a condition excuses performance, while breach of a covenant gives rise to damages.
- What is a severability clause?
- A provision that the remainder of the contract survives if one provision is held unenforceable. Courts may still decline to enforce a contract if the invalid term was essential.
- What is a representation in a contract?
- A statement of fact made to induce the other party to enter the contract. A false representation may support rescission or a claim for misrepresentation.
- What does the word 'may' signify in a well-drafted contract?
- Discretionary authority or permission. 'May' grants a right without imposing a duty.
- What is a merger or integration clause?
- A provision stating that the writing is the parties' complete and final agreement. It supports exclusion of prior agreements under the parol evidence rule.
- A covenant not to compete bars a departing employee from working anywhere in any industry for 10 years. What revision makes it more likely enforceable?
- Limit it to the employer's business, the employer's market area, and a short duration. Courts enforce restraints reasonably necessary to protect legitimate interests.
- What does the word 'shall' signify in a well-drafted contract?
- A duty imposed on the subject of the sentence. Drafters should use 'shall' consistently for obligations and avoid it elsewhere.
- What is the drafting fix for a vague time-for-performance provision such as 'promptly'?
- State a specific date or a fixed number of days from a defined event. Specific deadlines prevent disputes over what is reasonable.
- What is a warranty in a contract?
- A promise that a stated fact is true, with liability if it is not. Breach of warranty supports damages regardless of reliance in many jurisdictions.
- A seller's draft contract says the buyer 'will try to pay within 30 days.' What revision protects the seller?
- Replace it with 'Buyer shall pay within 30 days after delivery'. Mandatory language and a defined trigger create an enforceable obligation.