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Leaving Contract Drafting to Laymen Fraught With Danger

In a warning to businesses that the drafting of commercial contracts by laymen is fraught with risk, a lack of precision in an agreement between a golf club and its caterers resulted in lengthy court proceedings and substantial legal costs bills.

The contract had been drafted by the club’s managing director, who was not legally qualified, and was terminated after little more than a year. The club claimed that it was owed more than £22,000 in fees by the caterers. However, the latter argued that the contract had been wrongfully terminated and sought £90,000 in damages.

The caterers argued that the contract was to run for a fixed term of three years and that only thereafter was it terminable on four months’ notice. The club insisted that it had the right to terminate the agreement on notice ‘at any time’. The club initially won the debate and the caterer’s claim was dismissed by a judge.

In allowing the caterers’ appeal, however, the Court of Appeal noted that the contract had been concluded between laymen and that there was an obvious lack of exactitude in its wording. The lack of clarity in the termination provisions meant that it was necessary to fall back on an analysis of the parties’ probable intentions.

It appeared to have been agreed between the parties that an initial term of three years was required to render the contract reasonable. In those circumstances, the club’s argument that it would have been entitled to give notice of termination on the day after the contract was agreed was inimical to the parties’ intentions. The case was sent back to the County Court for re-hearing.