Most of you have likely heard of the 5 Ws in the context of journalism and problem solving. The answers to these questions, when applied to contracts or legal documents, can help minimize disputes and ensure all parties are satisfied. For this reason, Karen always advises her clients to review all contracts–including, but not limited to, estate planning documents–for the 5 Ws.
The questions to use while reviewing contracts are:
Who – Who has the rights in the contract? Who has the obligations in the contract? Is it a company or an individual?
If an individual, can he or she assign those rights or obligations? For example, if you hire a carpenter can she contract the work out to another carpenter?
If more than one individual has obligations, are either of them liable if the obligations are not met? This is called joint and several liability.
What – What are the rights and obligations of the parties? In other words, what does each party have a right to expect from the other and what does that party have to do to receive that?
When – When are the rights and obligations to be fulfilled? This is a common missing term in contracts I see that were not drafted by attorneys. It’s also one of the most common causes for dispute later. A homeowner contracts to have a deck built. The contract doesn’t specify when the deck is to be finished. It’s two months later and still no deck. The homeowner wants to know if the builder is in breach of the contract. Often I have to say that the homeowner has limited options because the contract didn’t specify a time frame.
Where – Where is the exchange or work to take place? If one party is entitled to payment, does it have to be delivered in person? Does the work need to take place at a particular location or can the worker choose where he or she performs the obligation as long as it is done?
Also, which jurisdiction governs this contract and where will disputes be heard? If you are contracting with a website developer, will you have to go to court in his state (or country) to enforce the contract?
Why – Although the reason for a contract is not an essential element, it can help if there are disputes about how the contract is to be interpreted. For example, a contract with a printer that specifies that the buyer needs the printed material for an upcoming conference can show the intent of the parties to have the work completed by a specific date.
This are not the elements that make an agreement a contract, but they are important provisions that can help to make sure everybody really is in agreement and avoid disputes later.