HOW TO DRAFT AN AGREEMENT

The main focus is to learn how to practically draft an agreement

• How to review an agreement that was submitted to you by explaining what are:
the main issues,
• the main points to look for in an agreement, what to focus on and what mistakes to avoid

COURSE STRUCTURE
• Key elements that condition the validity of an agreement
• The preamble of the agreement i.e., the introduction of the agreement

THE KEY ELEMENTS THAT CONDITION THE VALIDITY OF AN AGREEMENT

WHAT IS AN AGREEMENT?
An agreement is a necessary instrument that contains the legally binding arrangements agreed
upon between the parties as to a course of action.

CONDITIONS OF VALIDITY OF AN AGREEMENT

Every agreement has to fulfill certain conditions in order to be considered valid. These conditions
vary superficially between Civil law systems and common law systems.
I. Civil law systems
2. common law systems

Pg 7-11 missing

CONSIDERATION
• Consideration can be legally defined as the benefit that must be bargained for between the
parties, and is essentially the reason for a party entering into the contract.
• Consideration must be of value and is exchanged for the performance or promise of
performance by the other party
• In summary, one consideration (thing given) is exchanged for another consideration.

THE PREAMBLE OF THE AGREEMENT

DEFINITION
A preamble is defined as simply the introduction to any agreement. It consists in:
• A title for the agreement
• The determination of the parties to the agreement
• The recitals

1 Mia’s DRAFTING (FLOYD CONTINUED)

 THE MEMORANDUM OF UNDERSTANDING (MOU)
The MoU is an agreement between two or several parties and that establishes a common line of
action or that sets out the possibility of an eventual common project.

TITLE
• The importance of the title is that it gives us an idea of what to expect in the text of an
agreement. BUT IT DOES NOT HAVE ANY LEGAL EFFECT!
• In other words, a wrong title, or the absence of a title all together, will not annul or void
the agreement.

2 Mia’s DRAFTING (FLOYD CONTINUED)

 THE PARTIES
The second part to the preamble of the agreement is ‘The determination of the parties to the
agreement'. Usually, following the title you will find a sentence containing the date on which the
agreement was drafted, sometimes, the date can be mentioned at the end of the agreement.

3 Mia’s DRAFTING (FLOYD CONTINUED)

 DETERMINATION OF THE PARTIES SIGNING THE AGREEMENT Most agreements
are bilateral, meaning that there will be two parties. Sometimes the agreement can be multilateral,
with 3 or more parties. The first thing we have to do is to decide the order in which the parties will
be enumerated. The order does not have any legal effect but it follows a certain logic and helps in
the coherence of the whole agreement.

4 Mia’s DRAFTING (FLOYD CONTINUED)

5 Mia’s DRAFTING (FLOYD CONTINUED)
 DESCRIPTION OF THE PARTIES
It depends whether it is an individual or a company. If it is an individual:
• Name
• Nationality especially if it is an international agreement and some form of ID. If the person
is signing on behalf of someone else, it needs to be clearly stated
• Address
• If it is a Company:
• Name and legal form of company, such as limited liability company etc.
• where the company is registered, its registration number,
• Name of the officer representing the company in the agreement Company address, it can
be the registered address or headquarters or the address of a branch
• It is worth noting that both individuals and companies may elect domicile for the purposes
of the agreement.
• We also have to add the reference after the description of each party hereinafter referred to
as the First Party

THE RECITALS
• The third part to the preamble of the agreement is 'The Recital'.
• The recitals are like the background or the context of the agreement.
• For example: "Whereas, the first party owns a certain property and wishes to sell it;"
"Whereas the second party has proposed to purchase such property within the terms and
conditions of the present agreement".
• Nevertheless, sometimes if the operation, the transaction or the deal object of the agreement
is complex or if there are several parties or if there are previous agreements or other related
agreements, the recitals need to be much more detailed and comprehensive.
• This corroborates the clarity, cohesion and coherence of the agreement.

6 Mia’s DRAFTING (FLOYD CONTINUED)

 • Following the recitals, at the end of the preamble, there will be a sentence that goes along
these terms: "NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and understandings contained herein, it is hereby mutually agreed between the
Parties as follows".
• But keep in mind what we have explained the necessity of consent as a condition of validity
of an agreement.

MAIN TEXT OF THE AGREEMENT

We shall now look at the main text, in other words the articles or stipulations of an agreement.
• It is in this part that the understanding or the arrangement made between the parties will
be described.
• We shall look at:
• The linguistic style of the agreement, or the way sentences are formulated
• The main points (articles) that need to be addressed in most agreements.

THE LINGUISTIC STYLE OF THE AGREEMENT

A few principal points must be noted:
a) Clarity
• The most important matter in an agreement is clarity.
• An agreement has to be express, exact and precise.
• To be clear and to avoid any ambiguity, you should not as much as possible leave place for
interpretation.

7 Mia’s DRAFTING (FLOYD CONTINUED)

 FOR EXAMPLE, IT IS NORMAL TO FORMULATE A SENTENCE LIKE THIS:
"Except for and to the extent of, delays resuling from the fault of the Customer, any delays in the
performance of Company's undertakings under this Agreement, will result in the Company
incurring a late delivery penalty equal to two percent (2% of the due payment".
• This might seem like a wrongly or weakly constructed sentence, but in fact, this is the
normal language of an agreement.

THE ARTICLES OF THE AGREEMENT

• Standard First Article
• The first article is a standard one stating that: "the preamble to this agreement as well as
any annexes attached thereto shall be an integral part thereof".
• This simply means that the preamble, specifically the recitals and any annexes to the
agreement shall have the same force and same legal effect and be as binding as the
agreement itself.

TABLE OF CONTENTS
• In certain long and complicated agreements, the first articles are dedicated for a Table of
Contents, a Definition section or both.
• The table of contents is just for indication purposes and aims to facilitate reading of the
agreement.
• It does not have any legal effect.

8 Mia’s DRAFTING (FLOYD CONTINUED)

 DEFINITIONS
• Definitions can usually be found in an agreement with a lot of technical words, so instead
of defining such words in the text of an article, better define them once and for all in a
separate section and thereafter to refer to the definition when the word occurs.
• However, and unlike the table of contents, the definition of a word as agreed upon by the
parties is binding.

TITLES
• Sometimes there are titles for each article.
• The titles of the articles or sections or paragraphs like the title of the agreement does not
have legal effect.
• And a wrong title will not annul or void the agreement itself.

The rights and obligations of each party

• Clearly enumerate and describe the rights and obligations of each party in turn.
• It will benefit both parties to be able to determine in a clear manner what are the obligations
and rights of each of them.

Pg 45 missing

9 Mia’s DRAFTING (FLOYD CONTINUED)

 CONSIDERATION
• The consideration means what you are getting in return for an obligation.
• In a sales agreement, it is the payment of a purchase price.
• In a lease agreement, it is the rent.
• In a service agreement, it is the fee, etc.
• You have to clearly determine the amount of your fee, write it both in letters and in
numbers: and determine when it is due.
• Payment terms:
• Set the currency of the payment
• The payment schedules
• Determine the mode of payment: cash, cheque or wire transfer
• Determine bank details
• If it is a recurring payment, determine place of payment
• Determine whether a payment or any down payment will be made upon signature of the
agreement or if the payment will be made at a later stage.

10
Mia’s DRAFTING (FLOYD CONTINUED)
11
Mia’s DRAFTING (FLOYD CONTINUED)
 BREACH OF AGREEMENT
In the event a party breaches the Agreement, several questions need to be answered:
• What are the obligations of the breaching party and what are the rights of the other party?
• Will the other party have the right to immediately terminate the agreement? Or will the
breaching party have the possibility to remedy the breach? If yes within what period?
• Will there be a penalty for a breach?
• Will there be amounts that need to be reimbursed? And if there is an indemnification, is it
a lump sum or a penalty for every day or week or month?

CONFLICT RESOLUTION
The parties need to determine in advance if the conflict will be settled by judicial courts or by
arbitration.

COUNTERPARTS
• At the end of the agreement, the parties have to determine how many original copies the
agreement will be drafted in.
• Here is how this article is usually formulated:
• "this agreement has been executed in two counterparts, each of which shall be deemed
original and both counterparts shall constitute one whole instrument"

WITNESSES
• Following the copies, there is a sentence that says: IN WITNESS whereof, the parties
have caused this Agreement to be signed on the date first written above

12
Mia’s DRAFTING (FLOYD CONTINUED)
 • This is another formality that needs to be observed, and it addresses again the consent of
the parties and the determination of the signature date.

SIGNATURES OF THE PARTIES

• At the end of the Agreement, we have the names of the parties, their signature and the date
of the said signature.
• Name and designation of the person signing on behalf of the company.
• Plus the name of the company.
• The date of the signature is important because it is as of this date that the agreement comes
into effect.
• The signature date is even more important if it is an international agreement and not both
parties are signing at the same date.
• The agreement in this case comes into effect as of the date of the last signature.

CONCLUSION
These are the main issues that need to be settled in every agreement.
• But there are many other points that may need to be addressed in an agreement depending
on its object such as:
• Confidentiality and non-compete clauses
• Insurance clauses
• Warranties and representations

THE SPIRIT OF THE AGREEMENT

• An agreement in principle is an instrument that aims to safeguard and protect the rights of
both parties, not those of one party at the expense of the other party.
• Therefore, if you are drafting the agreement, on behalf of someone else; BE AS FAIR AS
POSSIBLE, put yourself in the other party's shoes, and you will see that the negotiation
and execution of the agreement will end up being much smoother.

13
Mia’s DRAFTING (FLOYD CONTINUED)
 Revision on statutes

14
Mia’s DRAFTING (FLOYD CONTINUED)
15
Mia’s DRAFTING (FLOYD CONTINUED)
16
Mia’s DRAFTING (FLOYD CONTINUED)
17
Mia’s DRAFTING (FLOYD CONTINUED)
 HOW TO DRAFT AN AGREEMENT
WHAT IS AN AGREEMENT
An agreement is a an instrument between two parties that creates mutual, legally enforceable
obligations.

ESSENTIAL ELEMENTS OF AN AGREEMENT

Certain essential elements must be present before a written agreement is binding, including:
• identification (names) of the parties,
• the purpose of the agreement,
• a detailed statement of the rights and obligations of each party,
• what each party is giving (e.g., money, products, or services) in exchange for what they're
getting,
• the term of the agreement (when it starts and when it ends),
• termination rights (when and under what circumstances one or both parties can end the
contract before the normal end date),
• liabilities of the parties if something goes wrong or they have a dispute,
• signatures, and
• many other provisions.

MAIN TEXT OF THE AGREEMENT

Pg8

Consideration
The consideration means what you are getting in return for an obligation.
• In a sales agreement, it is the payment of a purchase price.
• In a lease agreement, it is the rent.
• In a service agreement, it is the fee, etc.

18
Mia’s DRAFTING (FLOYD CONTINUED)
 • You have to clearly determine the amount of your fee, write it both in letters and in
numbers; and determine when it is due.

Breach of agreement
In the event a party breaches the Agreement, several questions need to be answered:
• What are the obligations of the breaching party and what are the rights of the other party?
• Will the other party have the right to immediately terminate the agreement? Or will the
breaching party have the possibility to remedy the breach? If yes within what period?

Conflict Resolution
The parties need to determine in advance if the conflict will be settled by judicial courts or by
arbitration.

WITNESSES
INWITNESS whereof, the parties have caused this Agreement to be signed on the date first written
above"
This is another formality that needs to be observed, and it addresses the consent of the parties and
the determination of the signature date.

Signatures of the parties

At the end of the Agreement, we have the names of the parties, their signature and the date of the
said signature.

19
Mia’s DRAFTING (FLOYD CONTINUED)
 REVISION ON MORTGAGES
INTRODUCTION
• A mortgage is a transfer of interest in certain immovable property in order to secure loan
advanced or to be advanced in the future.
• A mortgage deed is a document through which the mortgagor transfers an interest in real
estate to a mortgagee for the purpose of providing a mortgage loan.

THE EFFECT OF A MORTGAGE DEED

The mortgage deed is the evidence of the interest transferred to the mortgage holder. It determines
the terms and conditions between mortgagee and mortgagor.
• The transferor is called a mortgagor,
• the transferee a mortgagee;
• the principal money and interest the payment of which is secured for the time being are
called the mortgage money
• the instrument by which the transfer is affected is called the mortgage deed.

Pg5

Exercise
A gives B a loan of Le 100,000,
B transfers his family house to A as security.

TYPES OF MORTGAGE
SIMPLE MORTGAGE
• It is the mortgage where the mortgagor does not transfer the property's possession to the
mortgagee,
• and the mortgagor binds himself personally to pay the mortgage-money,
• and in the deed agrees that in case the mortgagor fails to pay in accordance with the deed
• the mortgagee has the right to have the mortgaged property sold or for sale to recover the
mortgage money.
• The mortgagee in such a case, is Known as simple-mortgagee.
• But a decree has to be passed by the court to liquidate the mortgage property (security) and
without the intervention of the court, the security cannot be liquidated.

Usufructuary mortgage
This is a special type of mortgage where the mortgagor delivers possession, either expressly or by
implication, and binds himself to deliver possession of the mortgaged property to the mortgagee.
He authorizes him to retain such possession until payment of the mortgage money.
• The mortgagee is also authorized to receive the rents and profits accruing from the property
and to appropriate it towards interest or in payment of the mortgage money, or partly for
interest or partly in payment of the mortgage money.
• The characteristics are:

20
Mia’s DRAFTING (FLOYD CONTINUED)
 • the possession of the mortgaged property is transferred to the mortgagee
• the mortgagee receives the income from the property e.g. rent, profit etc until the
repayment of the loan
• the title deeds remain with the mortgagor.

THE MORTGAGE DEED

A mortgage deed is required when an individual is loaning money from another person/business
and is required to transfer interest in a property to such person.
A mortgage deed is essential as it consists of the obligations, terms and conditions between the
mortgagor and the mortgagee:
• It determines the parties to the deed
• the rights of the lender,
• the extent of interest and title over the property,
• states the loan amount along with rate of interest, and of course.
• evidences that interest in the property has been transferred to the lender/mortgagee.

LETS LOOK AT THE CONTENTS OF THE DEED IN A LITTLE BIT MORE DETAIL:
DESCRIPTION OF THE DEED
It is necessary to specify the title of the deed in capital letters. for example:
"THIS DEED OF MORTGAGE is made the.... day of ....

DETAILS OF THE PARTIES

In the mortgage deed, it is necessary to specify the relevant personal details of the parties such as
full name of the mortgagor and the mortgagee and residential addresses
This Deed of Mortgage made at ... this ... day of .... ... Between X, of (hereinafter referred to as
'the mortgagor') of the ONE PART and Y, of
(hereinafter referred to as the 'mortgagee') of the OTHER PART.

BORROWER'S TITLE
The Mortgagor represents and warrants to the Mortgagee that the Mortgagor has good and
marketable title to an estate in fee simple absolute in the Land and has all right, title and interest
in the Property.

Example
WHEREAS
By a Conveyance dated the........ day of ...... and duly registered as No..... at Page... in Volume ....
In the Book of Conveyances in the office of the Registrar-General in Freetown and expressed to
be made between X of the one part and the Mortgagor herein of the other part for the consideration
therein mentioned all that piece or parcel of land and hereditaments therein described and which
it is hereby intended to be mortgaged were conveyed to the said Mortgagor for an estate in fee
simple absolute in possession free from incumbrance.

The Mortgagor is seised in fee simple of and otherwise well and sufficiently entitled to the lands
hereditaments and premises, which are hereby intended to be mortgaged and are more fully
described hereinafter.

21
Mia’s DRAFTING (FLOYD CONTINUED)
 THE LOAN AMOUNT
AND WHEREAS, the mortgagor has requested the mortgagee to lend him a sum of. ................
.....which the mortgagee has agreed on the mortgagor mortgaging his property.

Details regarding the modes and conditions for

repayment of the loan amount.
NOW, This Deed Witnesseth That in pursuance to the said agreement and in consideration of the
sum of....... at or before the execution of these presents paid by the mortgagee to the mortgagor
(the receipt whereof, the mortgagor doth hereby admit and acknowledge and of and from the same
hereby release and discharge the mortgage), the mortgagor hereby covenants with the mortgagee
that he will pay on the ........... day of .......(hereinafter called "the said date"), the said sum of ……

DETAILS REGARDING THE MODES AND

CONDITIONS FOR REPAYMENT OF THE LOAN
AMOUNT
X with interest @ ......% per annum from the date of these presents till the repayment of the said
sum in full, every quarter the first instalment of interest to be paid on the .......... day of ..... 20 and
each subsequent instalment on the .............. day of July, October, January and April of each
succeeding year until the said sum is repaid in full.

DEMISE OF MORTGAGED PROPERTY

Mortgaged property conveyed to mortgagee until the loan is repaid or other mortgage obligation
fulfilled in full, a process known as redemption.

EXAMPLE
For the consideration aforesaid the borrower as beneficial owner hereby demises to the Mortgagee
all that property specified in the schedule hereto TO HOLD the same unto the Mortgagee for the
term of ........ years from the date hereof without impeachment of waste subject to the provision of
cesser hereinafter contained.

MORTGAGE CLAUSE
The clause also describes the duty of the mortgagor and mortgagee:

EXAMPLES OF DUTIES OF MORTGAGEE

AND THIS DEED FURTHER WITNESSETH THAT the mortgagor and morigagee shall have
the following rights and duties:
• Mortgagor shall repair the mortgaged property and in case of mortgagee repays, the same,
Mortgagee's expenses for this purpose are considered properly incurred.
• The Mortgagor covenants to ensure the mortgaged property in the name of the mortgagee.
• In case any cost beard by the mortgagee the same shall be repaid by the mortgagor.
• During the tenure of mortgage the mortgagor covenants to the mortgagee that the
mortgaged property shall not be leased by him without the prior permission of the
mortgagee.
• In case of default by the mortgagor, the mortgagee is entitled to recover his money by the
sale of the mortgaged property.

22
Mia’s DRAFTING (FLOYD CONTINUED)
 • The mortgagor is authorized to sell the whole or part of the mortgaged property with the
consent of the mortgagee provided the sale proceeds are paid to the credit of the mortgage
account.

REDEMPTION CLAUSE
The provision specifies the tenure of the mortgage deed as to when the mortgagor is entitled to
return his property.

Example Redemption Clause

That if the Mortgagor shall whether lawfully demanded or not on the due date pay to the Mortgagee
all monies covenanted to be paid in accordance with the terms of his covenants herein the sub-
term hereby created shall automatically cease and determine and the Mortgagee shall at any time
thereafter at the request and cost of the Mortgagor reconvey and surrender the premises hereby
mortgaged to the use of the Mortgagor (IN FEE SIMPLE or will otherwise discharge this security
as the Mortgagor shall direct.

POWER OF SALE
In case of default by the mortgagor, the mortgagee is entitled to recover his money by the sale of
the mortgaged property.

EXAMPLE OF POWER OF SALE

And It Is Hereby Agreed And Declared that if the mortgagor does not pay the said mortgage
amount with interest when shall become due and payable under these presents, the mortgagee shall
be entitled to sell the said house through any competent court and to realise and receive the said
mortgage amount and interest, out of the sale proceeds of the house.

TESTIMONIAL
IN WITNESS WHEREOF the Mortgagor has set his hand and seal and the Mortgagee has caused
its Common Seal to be hereunto affixed the day and year first above written.

23
Mia’s DRAFTING (FLOYD CONTINUED)
 SIGNED SEALED AND DELIVERED by the within named Mortgagor the said

……………………………
MR. CHERNOR BAH

in the presence of
……………………………
MR. CHERNOH BAH

24
Mia’s DRAFTING (FLOYD CONTINUED)