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contract drafting checklist
Contract Drafting Checklist
Introduction
This checklist provides a comprehensive guide to drafting contracts in Kenya, ensuring compliance with legal requirements and best practices. It is essential to consult with a qualified legal professional for specific advice tailored to your individual circumstances.
Table of Contents
Parties
Subject Matter
Consideration
Terms and Conditions
Representations and Warranties
Indemnification
Liability
Termination
Dispute Resolution
Governing Law and Jurisdiction
Notices
Entire Agreement
Severability
Waiver
Assignment
Force Majeure
Confidentiality
Intellectual Property
Governing Law and Jurisdiction
Signatures
1. Parties
Identify the parties: Clearly state the full legal names and addresses of all parties involved in the contract.
Legal capacity: Ensure that all parties have the legal capacity to enter into a contract. This includes verifying their age, mental capacity, and any relevant legal restrictions.
Representations: Include representations regarding the parties' legal status, authority to enter into the contract, and any other relevant factors.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the general principles of contract law in Kenya, including the requirements for valid contracts.
The Companies Act, 2015: This Act governs the formation and operation of companies in Kenya, including their legal capacity to enter into contracts.
2. Subject Matter
Define the subject matter: Clearly and concisely describe the goods, services, or other subject matter of the contract.
Specificity: Avoid ambiguity and use precise language to define the subject matter.
Quantity and quality: Specify the quantity and quality of the goods or services to be provided.
Sources:
The Sale of Goods Act, Cap 31 of the Laws of Kenya: This Act governs the sale of goods in Kenya, including the requirements for a valid contract of sale.
The Supply of Goods and Services Act, 2015: This Act regulates the supply of goods and services in Kenya, including the requirements for contracts for the supply of services.
3. Consideration
Define the consideration: Clearly state the value exchanged by each party in the contract.
Legality: Ensure that the consideration is legal and not against public policy.
Sufficiency: The consideration must be sufficient, meaning it must have some value in the eyes of the law.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act defines consideration as an essential element of a valid contract.
The Contracts (Amendment) Act, 2015: This Act amended the Law of Contract Act to clarify the requirements for consideration.
4. Terms and Conditions
Express terms: Clearly state all the terms and conditions agreed upon by the parties.
Implied terms: Consider any implied terms that may apply under Kenyan law, such as the implied terms of merchantability or fitness for purpose in contracts for the sale of goods.
Clarity and completeness: Ensure that the terms and conditions are clear, unambiguous, and complete.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of implied terms.
The Sale of Goods Act, Cap 31 of the Laws of Kenya: This Act includes provisions on implied terms in contracts for the sale of goods.
5. Representations and Warranties
Representations: Include any statements of fact made by the parties that are not considered to be promises.
Warranties: Clearly state any promises or guarantees made by the parties regarding the subject matter of the contract.
Breach: Specify the consequences of a breach of representations or warranties.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act defines representations and warranties and their legal consequences.
The Sale of Goods Act, Cap 31 of the Laws of Kenya: This Act includes provisions on warranties in contracts for the sale of goods.
6. Indemnification
Indemnity clause: Include a clause that protects one party from liability for certain losses or damages caused by the other party.
Scope of indemnity: Clearly define the scope of the indemnity, including the types of losses or damages covered.
Limitations: Consider any limitations on the indemnity, such as a maximum amount or specific exclusions.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act allows for the inclusion of indemnity clauses in contracts.
The Civil Procedure Act, Cap 21 of the Laws of Kenya: This Act governs the procedure for enforcing indemnity agreements.
7. Liability
Limitation of liability: Consider including a clause that limits the liability of one or both parties for certain types of losses or damages.
Exclusions: Specify any exclusions from liability, such as consequential damages or indirect losses.
Reasonableness: Ensure that the limitations on liability are reasonable and not unduly restrictive.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act allows for the inclusion of limitation of liability clauses in contracts.
The Unfair Contract Terms Act, 1977 (UK): While not directly applicable in Kenya, this Act provides guidance on the principles of fairness in contract terms, including limitations on liability.
8. Termination
Grounds for termination: Clearly state the grounds for termination of the contract, such as breach of contract, material breach, or force majeure events.
Notice requirements: Specify the notice period required for termination and the method of delivery.
Consequences of termination: Outline the consequences of termination, such as the return of goods or services, payment of outstanding amounts, and any other relevant provisions.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract termination, including the grounds for termination and the consequences of termination.
The Sale of Goods Act, Cap 31 of the Laws of Kenya: This Act includes provisions on termination of contracts for the sale of goods.
9. Dispute Resolution
Dispute resolution mechanism: Specify the method for resolving disputes arising from the contract, such as negotiation, mediation, arbitration, or litigation.
Governing law: State the law that will govern the dispute resolution process.
Jurisdiction: Specify the jurisdiction where any disputes will be resolved.
Sources:
The Arbitration Act, Cap 4 of the Laws of Kenya: This Act governs arbitration in Kenya.
The Civil Procedure Act, Cap 21 of the Laws of Kenya: This Act governs litigation in Kenya.
10. Governing Law and Jurisdiction
Governing law: Specify the law that will govern the contract.
Jurisdiction: State the jurisdiction where any disputes will be resolved.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of governing law.
The Civil Procedure Act, Cap 21 of the Laws of Kenya: This Act governs the jurisdiction of Kenyan courts.
11. Notices
Method of delivery: Specify the method for delivering notices, such as email, registered mail, or courier.
Address for service: State the addresses for service of all parties.
Effective date: Specify the date on which notices will be deemed to have been received.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of notice provisions.
The Civil Procedure Act, Cap 21 of the Laws of Kenya: This Act governs the service of legal documents.
12. Entire Agreement
Entire agreement clause: Include a clause stating that the contract constitutes the entire agreement between the parties and supersedes all prior or contemporaneous communications.
Exclusion of prior agreements: This clause ensures that any prior agreements or understandings are not considered part of the contract.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of entire agreement clauses.
13. Severability
Severability clause: Include a clause stating that if any provision of the contract is held to be invalid or unenforceable, the remaining provisions will remain in full force and effect.
Preservation of validity: This clause ensures that the contract remains valid and enforceable even if a portion of it is invalid.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of severability clauses.
14. Waiver
Waiver clause: Include a clause stating that a waiver of any breach of the contract by one party does not constitute a waiver of any subsequent breach.
Preservation of rights: This clause ensures that the parties retain their rights to enforce the contract even if they have waived a previous breach.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of waiver clauses.
15. Assignment
Assignment clause: Include a clause that governs the assignment of the contract by one or both parties.
Restrictions: Specify any restrictions on assignment, such as the requirement for written consent from the other party.
Consequences of assignment: Outline the consequences of assignment, such as the transfer of rights and obligations.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of assignment clauses.
16. Force Majeure
Force majeure clause: Include a clause that excuses one or both parties from performance of the contract in the event of certain unforeseen circumstances beyond their control.
Examples of force majeure events: Specify the types of events that will be considered force majeure, such as natural disasters, acts of war, or government regulations.
Consequences of force majeure: Outline the consequences of a force majeure event, such as suspension of performance or termination of the contract.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of force majeure clauses.
17. Confidentiality
Confidentiality clause: Include a clause that protects confidential information disclosed by one party to the other.
Definition of confidential information: Clearly define the types of information that will be considered confidential.
Obligations of confidentiality: Specify the obligations of the parties to protect confidential information.
Sources:
The Data Protection Act, 2019: This Act governs the processing of personal data in Kenya, including the protection of confidential information.
18. Intellectual Property
Intellectual property rights: Include a clause that addresses the ownership and use of intellectual property rights arising from the contract.
Ownership: Specify the ownership of any intellectual property rights created or used in connection with the contract.
License: Grant a license for the use of intellectual property rights, if applicable.
Sources:
The Copyright Act, Cap 130 of the Laws of Kenya: This Act governs copyright in Kenya.
The Industrial Property Act, Cap 256 of the Laws of Kenya: This Act governs patents, trademarks, and industrial designs in Kenya.
19. Governing Law and Jurisdiction
Governing law: Specify the law that will govern the contract.
Jurisdiction: State the jurisdiction where any disputes will be resolved.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the principles of contract interpretation and the application of governing law.
The Civil Procedure Act, Cap 21 of the Laws of Kenya: This Act governs the jurisdiction of Kenyan courts.
20. Signatures
Signatures of all parties: Ensure that all parties sign the contract to indicate their agreement.
Date of signature: Include the date on which each party signed the contract.
Sources:
The Law of Contract Act, Cap 23 of the Laws of Kenya: This Act outlines the requirements for a valid contract, including the requirement for signatures.
Conclusion
This checklist provides a comprehensive framework for drafting contracts in Kenya. It is essential to consult with a qualified legal professional for specific advice tailored to your individual circumstances. By following this checklist, you can ensure that your contracts are legally sound and protect your interests.
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