A commercial contract, start to finish
A commercial contract is the deal written down, so it survives disagreement, a change of staff and the passing of years. Handled well, nobody reads it again. Handled badly, it is the only document anyone reads. Here is the whole arc - draft, read, negotiate, sign - in plain English, and an honest account of where the real work sits.
- A commercial contract exists to allocate risk and survive disagreement, not to be filed and forgotten. It is the deal made durable.
- There are four stages, each a distinct skill: drafting one, reading one put in front of you, negotiating the terms, and signing it properly.
- Drafting is deciding, not typing. A template hands you a skeleton; the risk allocation your particular deal needs is the part no template can supply.
- Reading a contract means reading for what is missing - uncapped liability, one-sided termination, an indemnity you do not understand - not only what is on the page.
- Signing carries formalities - the right signatory, a deed or a simple contract, witnessing, e-signature rules - and getting them wrong can undo the whole agreement.
Drafting is deciding, not typing
The blank-page stage, and the one people most often hand to a template.
Drafting looks like typing. It is actually deciding. Before a word is written, a commercial contract has to answer a short list of unglamorous questions: who are the parties, what does each one have to do, by when, for how much, and what happens when something goes wrong. The wording is only the record of those decisions.
Every commercial contract has a spine, and it rarely changes: the parties and what they are agreeing, the obligations on each side, payment, how long it lasts and how it ends, who is liable for what, who owns anything created, what stays confidential, and whose law governs it. Miss one and you have left a gap for a dispute to grow in.
For the contract to bind at all, English law wants four things: an offer, acceptance of it, consideration (each side giving something), and an intention to create legal relations. Most business deals clear that bar without trying. The certainty of the terms is where drafting earns its keep. A contract can be perfectly binding and still be a disaster, because it binds you to something you did not mean.
A template gets you the skeleton. It cannot know your deal - the one payment trigger that matters, the liability you cannot afford to accept, the thing the other side will try on. That is not a criticism of templates. It is the reason drafting is a job and not a download.
Read for what is not there
A contract lands in your inbox and someone wants it signed by Friday.
Read it as though it will one day be read aloud in court, because the version that matters is not what you were told on the call. It is what the words say.
There is an order that helps. Start with the definitions, usually clause 1, because a defined term means exactly what the definition says everywhere it appears, and a clever definition can quietly rewrite a clause forty pages later. Then the obligations - what you are actually on the hook for. Then the clauses that only bite when things go wrong: termination, liability, indemnities, warranties. Those are where the money moves.
The real skill is reading for what is not there. A missing liability cap. No exit for you and an easy one for them. An indemnity pointing one way only. An auto-renewal you will forget about until it has renewed. A governing law that is not England, quietly landing any dispute in another country's courts.
Spotting the gap is the part you can learn. Knowing whether a gap is normal for this kind of deal, or a problem worth stopping the signing over, is the part that takes having seen a few hundred of them.
Allocate the risk, keep the relationship
Changing the terms without blowing up the deal, or the working relationship after it.
Negotiating a contract is not haggling over a price. It is deciding who carries which risk, and landing each one with whoever is best placed to bear it. Done well, it is quiet and quick. Done badly, it is a fortnight of tracked changes and a soured relationship before anyone has done any work.
Agree the shape before the detail. A short set of heads of terms - who, what, how much, how long - settles the big questions while everyone is still friendly, and stops the contract itself becoming the argument. It is not usually binding, and it saves more time than almost anything else you can do.
Then pick your battles. Most clauses are not worth a fight. A handful always are: the liability cap, who owns the intellectual property, how each side can walk away, and when you get paid. Spend your goodwill there and concede the rest gracefully. A negotiator who fights every line loses the ones that matter.
And remember you have to work with these people on Monday. The tone of a negotiation outlives the negotiation. Firm, specific and reasonable beats clever every time.
Execution is where good drafting still falls over
The bit that looks like a formality, and quietly is not.
Signing feels like the easy bit. It is where more deals go quietly wrong than anywhere else, because the failures are procedural and invisible until they are tested.
Start with who signs. The person needs the authority to bind their company; a signature from someone without it can leave you with no contract at all. Then how it is signed. Most commercial contracts are simple contracts, and a signature is enough. Some documents have to be a deed - guarantees, anything with no consideration, certain property matters - and a deed has to be witnessed, and carries a longer window to sue on it: twelve years rather than six.
Electronic signatures are valid in England for the great majority of commercial contracts, which is why most now sign that way. There are exceptions and formalities, and a deed signed electronically has its own witnessing wrinkle, so it is worth a check rather than an assumption.
Two last habits. Sign the right version - version control at the finish line prevents a genuinely awful class of mistake. And diarise the dates the moment it is signed: renewal, notice periods, reviews. A contract is a live document with deadlines in it, not a PDF you file and forget.
Frequently asked questions
Can I write a commercial contract myself?
There is nothing to stop you, and for a simple, low-value arrangement a good template may be enough. The question is not whether you can produce a document - it is whether you can see the risks the document is quietly allocating to you. That is where doing it yourself tends to cost money later rather than saving it now.
What makes a contract legally binding?
Four things under English law: an offer, acceptance of that offer, consideration (each side giving something of value), and an intention to create legal relations. The terms also have to be certain enough to enforce. Signing is not what makes a contract binding - agreement on the essential terms is, and a contract can be binding with no signature at all.
Is an electronic signature legally binding in the UK?
Yes. For the great majority of commercial contracts an electronic signature is as valid as a wet-ink one. There are exceptions and extra formalities for some documents, and deeds carry their own witnessing requirements, so it is worth checking the specific document rather than assuming.
What is the difference between a contract and a deed?
A simple contract needs consideration - each side giving something - while a deed does not, which is why guarantees and one-sided promises are usually deeds. A deed has to be signed in the presence of a witness and delivered. You can bring a claim on a deed for twelve years, against six for a simple contract.
How long should a commercial contract be?
As long as the deal needs and no longer. Length is not the measure. A short contract covering the real risks beats a long one padded with clauses that do not fit. The aim is to deal with what happens when things go wrong, in as few words as will do it clearly.
This is the point most people call us
Silva drafts, reviews and negotiates commercial contracts for businesses every day - clause by clause, in plain English, with the risks flagged and priced. Day-to-day support when you want a hand on a single deal, or a retainer when contracts are a steady part of the work.