Commercial contracts are the backbone of business. They set the rules for how deals get done, who takes on which risks, and what happens when things don’t go according to plan. But drafting them well is easier said than done…especially when deadlines are tight and the stakes are high.

 

The good news: a few core principles can dramatically improve the clarity, enforceability, and efficiency of your agreements. In this first part of our two-part series, we’ll share five essential tips that every in-house lawyer, contract manager, or outside counsel should keep in mind when drafting commercial contracts.

 

From defining key terms to anticipating future scenarios, these best practices help you avoid disputes before they start — and set the stage for contracts that work in the real world, not just on paper.

 

1. Start With the Business Deal, Not the Template

 

Every strong contract begins with a simple question: what did the parties actually agree to? Too often, drafters reach for a familiar template and start filling in blanks before the core deal is clearly captured. That can lead to contracts that are airtight legally, but fuzzy on the business fundamentals.

 

A better approach is to ground the contract in the commercial intent first, then layer on the legal scaffolding. Spell out the who, what, when, and how much in plain terms before turning to warranties or dispute clauses.

 

Example: If the parties agreed that a vendor will deliver 500 units per month at $25 per unit, make sure that’s front and center. Once the economic heart of the deal is locked down, you can structure the rest of the agreement around it: payment schedules, delivery obligations, remedies, and more.

 

Starting from the business deal ensures the contract reflects reality. It also builds trust between the parties: everyone sees their understanding on the page before the legal fine print takes over.

 

Pro tip: If possible, begin with a short term sheet or letter of intent that captures the key commercial points: price, deliverables, timelines, renewal options. That document becomes the roadmap for the full contract, reducing the risk of surprises or gaps once the lawyers start drafting.

 

2. Define Key Terms Early and Clearly

 

Clarity begins with definitions. When a contract uses terms such as Services, Deliverables, or Effective Date, those terms should mean exactly the same thing every time they appear. Without a clear “definitions” section or glossary, contracts become scavenger hunts — forcing readers to guess whether “services” on page 3 is the same as “services” on page 17.

Placing key definitions up front, or at least in a dedicated section, eliminates confusion. It also speeds up review: business stakeholders, counterparties, and future team members can quickly see what each capitalized term means without rereading the whole document.

Example: Instead of writing “the services to be provided” one way in Section 1, “the Deliverables” another way in Section 4, and “Vendor obligations” in Section 7, define Services once. Then use it consistently across the agreement.

 

Pro tip: Keep definitions simple (without compromising precision). Define them so clearly your business stakeholders could quote them back without calling you. Overly complex definitions don’t prevent disputes; they invite them.

 

3. Balance Precision With Readability

Contracts have to hold up in court…but they also need to be understood by the people who work with them every day. Overly complex drafting slows down reviews, creates unnecessary negotiation points, and makes the contract harder to enforce in practice.

The best drafting strikes a balance: precise enough to eliminate ambiguity, but plain enough to be read quickly and applied consistently. Think “clear and enforceable,” not “dense and impenetrable.”

Example: Instead of writing “the party of the first part shall hereinafter be responsible for the aforementioned obligations,” write simply: “The Vendor is responsible for these obligations” (and be sure to define “Vendor”). Both are legally valid, but only one invites confidence.

Pro tip: Read your contract aloud. If a sentence takes more than one breath, it’s probably too long. Short, direct clauses are easier to negotiate, and harder to misinterpret.

4. Anticipate Future Scenarios

A well-drafted contract doesn’t just capture today’s agreement; it prepares for what might happen tomorrow. Markets shift, teams change, and projects rarely unfold exactly as planned. Contracts that build in flexibility and contingencies can prevent minor hiccups from turning into major disputes.

Think about how the agreement ends and evolves, not just how it begins. What happens if deadlines slip? If the parties want to renew? If the relationship just doesn’t work out? If the regulatory landscape shifts during the term of the agreement? The answers should be clear in the document.

Example: A software services agreement might include a renewal option with 90 days’ notice, specify service credits for downtime, and spell out early termination rights if either side breaches key obligations. Those clauses don’t predict the future — but they make sure both parties know what happens if the future looks different than expected.

Pro tip: When obligations are outside the parties’ control or likely to change — like benchmark rates set by a third party, or specific personnel commitments — consider putting them in an addendum incorporated by reference. That way you can update the addendum as necessary instead of amending the entire contract.

5. Align Risk Allocation With Leverage

Every contract involves risk; the art is deciding who bears it. Strong drafting matches risk allocation to each party’s bargaining power and practical ability to manage that risk. Trying to push all risk onto the other side may look like a “win,” but it often backfires in negotiations or strains the relationship long-term.

Instead, think about fairness and practicality. If one party controls delivery timelines, they should also bear liability for delays. If the other party controls compliance with regulations, that’s where the warranty should sit. Aligning risks with control makes contracts both more enforceable and more sustainable.

Example: In a SaaS agreement, the vendor might indemnify the customer for IP infringement (since the vendor controls the code — especially relevant in the age of generative AI), while the customer indemnifies the vendor for misuse of the platform (since the customer controls how it’s used). Each side takes on the risks it can actually mitigate.

Pro tip: Risk allocation doesn’t just live in indemnities; it’s baked into definitions, payment structures, and performance obligations, too. Before finalizing the agreement, map the top risks in the deal (e.g., delivery failure, regulatory fines, IP disputes, data breaches, nonpayment). Then check that the party with the most control over each is also the party bearing the contractual responsibility.

Conclusion (For Now)

Drafting strong commercial contracts isn’t about cramming in as much legal jargon as possible. It’s about clarity, fairness, and foresight. By starting with the business deal, defining key terms up front, writing with readability in mind, anticipating future scenarios, and aligning risk with leverage, you set the stage for smoother negotiations and stronger business relationships.

But even the best drafters know: mistakes hide in the details. Undefined terms, inconsistent references, and misaligned risk allocations can sneak through when you’re juggling dozens of contracts under tight timelines. That’s where the right tools make all the difference.

BoostDraft helps legal and business teams track definitions and key terms across an agreement, catch inconsistencies early, and focus on the strategic work that drives deals forward. Faster reviews, fewer errors, and more confidence in the final contract.

The best contracts aren’t just well-written — they’re well-managed. And that’s where tech like BoostDraft helps turn drafting tips into everyday practice. Get a demo to see how — and keep an eye out for more pro tips from the contract experts at BoostDraft. In part two, we’ll dive into dispute resolution, governance, and technology-driven drafting practices.