Lawyers as Drafters and Reviewers
of Contracts in Ghana
1. Introduction
In the business world, contracts serve as
the backbone of all commercial transactions. From simple service agreements to
complex corporate deals, contracts define the terms of engagement, protect
parties' rights, and provide mechanisms for resolving disputes. In Ghana, as in
other jurisdictions, lawyers play a critical role in drafting and reviewing contracts
to ensure that these documents are legally sound, enforceable, and in
compliance with applicable laws. Lawyers who specialize in contract law provide
valuable services that safeguard businesses and individuals from legal
pitfalls, ensuring that all parties' obligations are clear and binding.
2. Importance of Contract Drafting
and Review
The process of drafting and reviewing
contracts is a fundamental legal service provided by lawyers, especially in a
dynamic legal and business environment like Ghana. A contract is not just a
simple document; it is a legally binding agreement that can have significant
implications for businesses and individuals involved. In Ghana, the legal
principles of contract law are governed by the Contracts Act, 1960 (Act 25), which provides
the framework for creating valid and enforceable agreements.
Effective contract drafting ensures that
the rights and responsibilities of all parties are clearly outlined, and it
minimizes the potential for disputes. On the other hand, contract review
involves analyzing the terms of a contract to assess whether the agreement is
balanced, legally sound, and in line with the client’s best interests. Lawyers
are trained to identify legal risks, ambiguities, and potential problems that
could arise in the future.
3. Role of Lawyers in Drafting
Contracts
The process of drafting a contract
involves several key steps, and the role of a lawyer in each step is crucial to
ensure that the contract serves its intended purpose. Some of the primary
responsibilities of a lawyer in drafting contracts include:
a) Understanding Client's Needs
and Objectives
Before drafting any contract, the lawyer
must fully understand the client's business goals, the nature of the
transaction, and the relationship between the parties involved. In Ghana,
contracts can cover various areas of business, such as sales, services,
partnerships, intellectual property, and employment. Lawyers begin by
consulting with clients to determine their specific needs and objectives.
For example, in a business partnership, a
lawyer will discuss the division of responsibilities, profit-sharing, and the
duration of the partnership. This ensures that the contract reflects the
client's business vision and protects their interests.
b) Clear and Precise Language
A critical aspect of contract drafting is
using clear, precise, and unambiguous language. Lawyers must ensure that the
terms used in the contract are understandable and leave no room for
misinterpretation. Ambiguities in contract terms can lead to disputes and
costly legal battles. In Ghana, lawyers pay particular attention to drafting
contracts that align with local legal practices and terminology while remaining
accessible to all parties involved.
For instance, in a commercial lease
agreement, the lawyer must clearly define the rental payment terms, maintenance
responsibilities, and the duration of the lease. Any unclear terms may create
confusion or disputes later.
c) Compliance with Applicable Laws
Contract drafting in Ghana requires
adherence to local laws, including statutes, regulations, and case law. Lawyers
must ensure that the contract complies with laws relevant to the specific
business context. For example, employment contracts must be drafted in
compliance with the Labour Act, 2003 (Act 651), and commercial
contracts must consider laws such as the Companies Act, 2019 (Act 992) and the Trade
Marks Act, 2004 (Act 664).
Additionally, contracts must reflect the
legal capacity of the parties involved, whether individuals, companies, or
government entities. The lawyer ensures that the contract does not violate any
statutory provisions, and any provision contrary to public policy or unlawful
behavior is excluded.
d) Drafting Terms and Conditions
The core of any contract lies in its
terms and conditions. A lawyer drafts these provisions to reflect the
objectives of the parties while ensuring fairness and legality. Some of the key
terms include:
Payment terms: These define the payment amount,
method, and schedule in financial transactions.
Performance obligations: What each
party is obligated to do or refrain from doing under the contract.
Term and termination clauses: the
duration of the contract and the conditions under which it can be
terminated.
Dispute resolution mechanisms: These
include arbitration or mediation clauses to settle disputes without going
to court.
Lawyers are trained to anticipate
potential future issues and include provisions in the contract that protect
their client’s interests, such as limitation of liability clauses, force
majeure clauses, and confidentiality agreements.
4. Role of Lawyers in Reviewing
Contracts
Reviewing contracts is as important as
drafting them. Lawyers must scrutinize existing contracts to identify potential
risks, inconsistencies, or unfair terms that could be detrimental to their
client’s position. Some of the primary functions of a lawyer during contract
review include:
a) Identifying Potential Risks
When reviewing a contract, lawyers assess
the overall risk exposure of their client. In Ghana, businesses must navigate a
regulatory landscape that can change rapidly, so it is essential to identify
any clauses in a contract that may expose their client to unnecessary legal or
financial risk. For example, a clause in a supply agreement that imposes
unlimited liability on a business for damages could be harmful, especially in
case of a dispute.
Lawyers may also look for ambiguities in
clauses that could lead to conflicting interpretations and costly litigation.
They ensure that all terms are legally enforceable and that any agreements
made are in line with the client’s long-term goals.
b) Ensuring Balanced Terms
A contract is not only about protecting
the interests of one party. Lawyers in Ghana ensure that contracts are balanced
and fair to both parties, even when they represent one party. Unfair or
one-sided contracts can lead to disputes and may be deemed unenforceable by the
courts. Lawyers aim to create contracts that reflect the mutual intent of the
parties involved while safeguarding their client’s interests.
For example, if reviewing a joint venture
agreement, a lawyer will ensure that each party's contributions,
responsibilities, and profits are clearly defined and equitable. They may
advise on the inclusion of exit clauses, mechanisms for dispute resolution, and
protections against unfair competition.
c) Ensuring Clear Language and
Accuracy
A key element in contract review is
ensuring that the language used in the document is clear, precise, and legally
sound. Lawyers carefully analyze each provision for accuracy and clarity,
eliminating any ambiguity that could lead to misinterpretation. If any clauses
are vague or unclear, lawyers recommend amendments to ensure that the document
reflects the true intent of the parties.
d) Advising on Legal and
Commercial Implications
Reviewing a contract involves assessing
not only the legal implications but also the commercial impact. Lawyers provide
business owners and stakeholders with insight into how specific clauses may
affect their business operations. For example, a contract involving the supply
of goods may contain performance clauses that could affect a business’s ability
to meet production deadlines. Legal advisors must assess how the terms of the
contract align with the business’s operational capabilities.
In Ghana, lawyers may also examine
whether a contract complies with tax and regulatory laws, ensuring that the
contract will not expose the client to undue regulatory scrutiny or penalties.
5. Conclusion
Lawyers in Ghana play an essential role
in drafting and reviewing contracts, providing invaluable services that protect
businesses from legal risks and ensure that agreements are clear, fair, and
legally enforceable. Their expertise in understanding both the legal
requirements and the commercial context of a transaction is vital for business
success. By carefully drafting contracts that reflect the parties' intentions
and by meticulously reviewing contracts for potential risks, lawyers in Ghana
contribute to a more predictable and secure business environment. In a rapidly
evolving legal landscape, businesses must rely on skilled legal advisors to
navigate complex contracts and ensure their long-term success.
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