The Importance of What-ifs…?

When drafting a contract on behalf of a client, it is vitally important to engage in multiple “what-if” scenarios. A good contract will anticipate as many future “problems” as possible and express the parties’ understanding in the event such situations arise. Speaking with your client about the nature of its business and past and present disputes with competitors is a good place to start; such conversations will generate many issues the drafter may not otherwise consider.

It is often helpful to consider the worst possible scenario for your client when drafting an agreement (i.e. what if the licensee goes bankrupt? what if the licensee refuses to pay royalties? what if they steal the licensor’s clients?). Such an analysis focuses the attention of the drafter on those contract provisions which could be of primary importance to the client in any later disputes. A thorough “what-if” analysis when drafting a contract often saves a client from having to pay considerable future expenses.

Even the most cautious drafting, and the most exhaustive imagination, rarely covers every possible contingency. However, conversations with your client and investigation into the types of disputes typical to the area covered by the contract can be helpful in creating a contract that will be sufficient enough to avoid the need for subsequent interpretation from courts.