Introduction
Contract drafting is a fundamental aspect of business negotiations, often reflecting the balance of power between parties. This practice note delves into who typically takes on the responsibility of drafting contracts across various business relationships, highlighting the strategic implications and practical considerations involved.
General Principle
- The party who drafts the contract frames the deal in their favor.
- Drafting gives control over structure, definitions, risk allocation, and remedies.
- The other party can negotiate changes, but starting from your own draft is a strategic advantage.
Case-by-Case Breakdown
| Relationship | Typical Drafter | Reasoning |
| Supplier vs Purchaser | Supplier (esp. in commodity or standardized goods) | Suppliers often have standard terms they roll out to multiple buyers. However, in large bespoke deals, purchasers may draft to ensure delivery, quality, and compliance. |
| Service Provider vs Client | Service Provider | Providers usually have template service agreements to protect against liability and scope creep. But in high-value consulting or government procurement, the client often drafts to enforce performance standards. |
| Licensor vs Licensee | Licensor | Licensors want to protect IP, limit use, and control royalties. Licensees may push back, but the licensor’s draft sets the baseline. |
| Lessor vs Lessee | Lessor | Landlords or equipment lessors typically draft leases to protect their asset and ensure payment. Lessees negotiate concessions (renewals, maintenance, exit rights). |
| Discloser vs Disclosee (NDA) | Discloser | The party sharing sensitive information drafts to maximize confidentiality and limit liability. If both parties disclose, a mutual NDA is drafted, often by the party initiating discussions. |
Strategic Considerations
- Bargaining Power: Whoever has more leverage (scarce resource, unique expertise, market dominance) usually drafts.
- Industry Norms: Some sectors have entrenched practices (e.g., landlords draft leases, licensors draft licenses).
- Risk Allocation: The drafter can shift risks (e.g., warranties, indemnities, liability caps) in their favor.
- Efficiency: Using your own template saves time and ensures consistency across deals.
Practical Tip
If you are in a weaker position and the other side insists on drafting, prepare a counter-draft checklist. That way, you can systematically review and push back on clauses like:
- Limitation of liability
- Termination rights
- Payment terms
- Governing law and dispute resolution
Conclusion
In contract negotiations, drafting is a powerful tool that reflects bargaining strength and strategic intent. Understanding who typically drafts and why can help you better prepare and negotiate terms that protect your interests.
Disclaimer
This practice note is for informational purposes only and does not constitute legal advice. For specific contract drafting or negotiation guidance, consult a qualified legal professional.