Good Contracts Prevent Disputes: A Practical Guide to Better Drafting

Even well managed businesses can find themselves involved in contractual disputes. As explored in this podcast episode, commercial disputes often arise not from bad faith, but from contracts that fail to adequately address what happens when circumstances change or relationships deteriorate.

Poorly drafted agreements can create uncertainty around rights, obligations and enforcement. This episode of Explain That by Velocity Legal examines how thoughtful contract drafting can reduce the likelihood of disputes arising in the first place, rather than simply managing conflict after it has already escalated.

Why Contracts Matter Long Before a Dispute Arises

This podcast explores the principle that contracts should be drafted with potential disputes in mind, rather than drafted solely to facilitate a transaction. Business owners are often focused on commercial momentum and efficiency, relying on short form agreements, templates or informal email exchanges to get deals across the line.

As discussed in the episode, this approach can leave material issues unresolved. When expectations are not clearly documented, disagreements about scope, payment, timing or termination become far more likely. Once a dispute arises, the contract becomes the primary point of reference, and any ambiguity can significantly increase cost, delay and exposure.

Common Drafting Issues That Give Rise to Disputes

The podcast highlights that many commercial disputes can be traced back to recurring drafting shortcomings.

These commonly include
• Vague or poorly defined scope of work or services
• Unclear payment structures and timing
• Inadequate or ambiguous termination provisions
• Reliance on informal agreements or correspondence
• Overuse of generic templates without adaptation

As explained in the episode, contracts that lack precision often require courts or tribunals to determine what the parties intended. That process introduces uncertainty and expense that could have been avoided through clearer drafting.

Jurisdiction and Governing Law

Jurisdiction is a key issue examined in the podcast. Where contracts fail to specify governing law and jurisdiction, parties may find themselves disputing not only the substance of the disagreement, but also where and how it should be resolved.

For businesses operating across jurisdictions, this can create unnecessary complexity and cost. As discussed, failing to address jurisdiction at the drafting stage can result in disputes being litigated in unexpected or commercially inconvenient forums. Clear jurisdiction clauses provide certainty and reduce the risk of procedural disputes overshadowing substantive issues.

Boilerplate Clauses Deserve Careful Attention

The episode also explores the role of boilerplate clauses, which are frequently treated as standard or inconsequential. In practice, these provisions often play a decisive role once a dispute arises.

Clauses dealing with
• Governing law and jurisdiction
• Termination rights
• Dispute resolution processes
• Entire agreement provisions

can materially affect how a dispute is conducted and resolved. As noted in the podcast, these clauses are often scrutinised only after a dispute has emerged, when their commercial impact becomes clear and irreversible.

Drafting Contracts With Disputes in Mind

A central theme of the episode is that effective contracts anticipate disagreement. Drafting with disputes in mind does not reflect pessimism, but commercial realism.

As discussed, contracts that clearly allocate risk, establish processes and define consequences provide a framework for managing disagreement early, and in some cases preventing disputes from escalating altogether. This approach can preserve commercial relationships and significantly reduce the cost and disruption associated with formal disputes.

Practical Takeaways for Business Owners

This podcast outlines several principles business owners should consider when entering into contracts, including:

• Avoid reliance on informal or verbal arrangements
• Clearly define scope, payment and termination rights
• Treat jurisdiction and governing law as core contractual terms
• Review boilerplate clauses carefully rather than treating them as standard
• Draft contracts on the assumption they may be relied on in a dispute

Addressing these matters at the outset can substantially reduce risk and place businesses in a stronger position if disagreements arise.

The Takeaway

This episode reinforces that contracts are more than transactional documents. They are risk management tools. As explored in the podcast, well drafted contracts can prevent disputes by providing clarity, certainty and enforceable outcomes.

For business owners, investing time and care in contract drafting can significantly reduce the financial, operational and reputational impact of commercial disputes later.
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🎧 Listen to the full episode of Explain That by Velocity Legal for a practical discussion on drafting contracts that protect your business.