Contracts

Lesson 30: Common Pitfalls

Negotiating contracts can be a complex and nuanced process. Even experienced negotiators can fall into common pitfalls that can undermine the effectiveness of the contract or lead to legal disputes. In this lesson, we will explore some of the common pitfalls to avoid when negotiating contracts.

Pitfall 1: Ambiguity in Terms

One of the most common pitfalls is the use of ambiguous terms in the contract. Ambiguities can lead to different interpretations and potential disputes between the parties.

Always ensure that the terms used in the contract are clear and unambiguous.


The contractor shall complete the project in a timely manner.

The contractor shall complete the project within 90 days from the start date.

Pitfall 2: Inadequate Definitions

Failing to define key terms can also lead to misunderstandings. Ensure that all important terms are clearly defined in the contract.


Payment shall be made upon delivery.

Payment shall be made within 30 days upon delivery of the goods as defined in Section 2.1.

Pitfall 3: Ignoring Governing Law

Another common pitfall is neglecting to specify the governing law of the contract. This can be especially problematic in cross-border agreements.


This contract is governed by the laws of the jurisdiction of the signing party.

This contract is governed by the laws of the State of California.

Pitfall 4: Overlooking Dispute Resolution

Contracts should include a clause for dispute resolution to outline how disputes will be handled. This helps in mitigating potential conflicts.


No dispute resolution clause included.

Any disputes arising from this contract shall be resolved through arbitration in accordance with the rules of the American Arbitration Association.

Pitfall 5: Incomplete Clauses

Ensure all clauses in the contract are complete and cover all necessary aspects. Incomplete clauses can leave important details to be interpreted, leading to disputes.

Incomplete clauses can be as dangerous as ambiguous ones. Make sure every aspect is thoroughly covered.

Visualizing Common Pitfalls

By avoiding these common pitfalls, you can draft clearer, more effective contracts and minimize the potential for disputes. For more information on drafting effective contracts, please refer to Lesson 8: Clarity and Precision and Lesson 29: Negotiation Strategies. Additionally, check out Contract Drafting: Powerful Prose in Transactional Practice and A Manual of Style for Contract Drafting for more in-depth insights.