The Difference Between a Good Contract and a Great One

Most commercial contracts are drafted to protect one party. The indemnities are one-sided. The termination rights favour the drafter. The governing law clause picks the most convenient jurisdiction for whoever wrote the document.

These contracts do their job. But they also create an adversarial dynamic from day one.

The Mindset Problem

When a contract is drafted purely as a defensive instrument, both parties approach signing with suspicion. The receiving party red-lines every imbalanced clause. Negotiations become hostile. What started as a commercial opportunity becomes an exercise in mutual distrust.

A great contract is drafted differently. It reflects what both parties actually agreed — including who bears which risk. It is fair enough that the other side doesn't feel compelled to negotiate every clause. It builds in flexibility — mechanisms for the parties to resolve problems before they become disputes.

What Great Contracts Do Differently

They contain a clear statement of purpose — even just two sentences about what the parties are trying to achieve. This context helps interpret ambiguous provisions later.

They address what happens when things go wrong — not just who is liable, but how the parties will communicate, escalate, and if necessary, exit gracefully.

They have mutual obligations — both parties are accountable, not just the one the drafter's client is paying.

They are written in plain language where possible. Not every sentence needs to be a subordinate clause spanning four lines.

The Practical Test

Ask this before you finalise any contract: if something goes wrong and both parties are reading this for the first time, will they both feel it was fair?

If the answer is no — the contract may protect you in litigation but it will damage the relationship. And most businesses run on relationships, not litigation.