Our social interaction, governance or economy is today dictated by agreements either through verbal or written, formal or informal. Thus, contract drafting not only requires strong command over the written language but also the ability to anticipate future complexities and subject knowledge. Yet in Bhutan, this is hardly recognized until everything goes wrong and become irreversible and irreparable. The recent news of shareholders including villagers of Samdrupcholing community is a typical example of poor contract drafting and contrarily also reflects the importance of good drafting as the company and shareholders are not clear about what they can do in an event of a breach. The contract drafting in Bhutan must undergo major reform to keep with the ever-increasing complexities of society and its functions. With the emergence of technology, the complexity is only going to grow rapidly.
Once upon a time, agreement drafting only required writing skills, either in English or Dzongkha. However, times have changed and merely strong command over English or Dzongkha is not enough. The drafters must possess adequate knowledge on subject matters in which they draft agreements. For example, if one drafts an agreement on shares, without a thorough knowledge of company law, share and debentures, one should refrain from drafting such contracts. Similarly, without understanding the commercial laws, drafting commercial agreements are more prone to various problems.
Bhutan enacted a general law governing contracts known as the Contract Act of Bhutan in 2013. In summary, Section 16, 17 and 18 defines a contract as an agreement enforceable at law meaning, any agreements which contravene the laws including policies will be considered invalid agreement. Further, these sections require that every agreement must have a “lawful consideration and must have a lawful object.” Besides, this law requires that agreements must be executed with the free consent of parties which protects the freedom of contracts principle.
Considering illiteracy on laws among our general population on contracts including even highly educated people, the contract drafters must go beyond mere drafting to explaining the possible impacts of entering into any kind of agreement. This means the way the agreements are written must also change and adapt to the changing market scenarios and economic growth. Otherwise, when complexities grow and drafters draft the same way, the likelihood of ambiguities are very high causing serious legal injuries to the parties especially the weaker parties such as in the recent news of Samdrupcholing community. Further, the Contract Act also imposes duties of due diligence and avoid fraud, misrepresentation, undue influence on parties while entering into agreements. Drafters must be aware of such important protective mechanisms while drafting agreements and at least explain to each party before they sign the agreements.
There are adequate options of remedies under the Contract Act which can be inserted easily while drafting. The inclusion of appropriate remedial clauses would immensely reduce time and resources in case of a dispute in the future related to such agreements. The one size fits agreement templates must be reformed because such templates often either incorporate everything in mess or omit many important aspects of an agreement.
The way forward is to reflect our current system, reform the system of drafting agreements is providing clear, precise, and specific provisions. The drafters must acknowledge that any agreements once signed by the parties are enforceable at law meaning each contract possess the authority of law and can cause irreparable harm to parties.
Sonam Tshering Lawyer, Thimphu
Disclaimer: The views expressed in this article are author’s own.