Contract Drafting Exercise

Business entity is limited liability corporation. John and Emmitt or both limited partners where john is the face of the company and John and Emmitt is the investors

Now that the business entity has been created for the new restaurant, John Taylor and Emmitt Beck are ready to enter into a contract for a restaurant food and supply vendor.  John and Emmitt have narrowed the vendor to these two companies who are offering the following terms and conditions:

1. Restaurant Food Group, Inc., (“RFG”), a Florida corporation, is offering the entity ten (10) business days for payment. Payment can be made in check or through RFG’s online payment system.  There is a 2% discount on the current bill for paying online.
   1. RFG delivers food and supplies six (6) days a week (Monday – Saturday), all holidays except Christmas and Thanksgiving, and limited delivery on New Year’s Day and July 4^th.
   2. RFG has a separate truck for fresh food that delivers the same as above.
   3. For next day delivery, orders must be submitted by 6:00 pm, EST.
   4. The restaurant must order at least $750 in items for a delivery (i.e., there is a $750 delivery minimum).
   5. RFG stocks 10,000 items in its warehouse in Bradenton, Florida.
   6. RFG requires John and Emmitt to both sign a personal guarantee.
   7. Late payment interest of 1.5% per month and $25 fee for a returned check.

2. Florida Food Sales, LLC, (“FFS”), a Florida limited liability company, is offering the entity five (5) business days for payment. Payment can be made in cash, certified check, or online through FFS’ online payment system.  There is a 4% discount on the current bill for paying online.
   1. FFS delivers five (5) days a week (Monday – Friday), all holidays except Christmas and Thanksgiving, and limited delivery on New Year’s Day and July 4^th.
   2. Fresh items are on the same truck as frozen, canned, etc.
   3. For next day delivery, orders must be submitted by 5:00 pm, EST.
   4. The restaurant must order at least $500 in items for a delivery (i.e., there is a $500 delivery minimum).
   5. FFS stocks 8,000 items in its warehouse in Lakeland, Florida.
   6. FFS will not require John and Emmitt to sign a personal guarantee.
   7. Late payment interest of 1.5% per month and $50 fee for a returned check.

Instructions:

1. Based on the facts given, draft a contract between your entity and the supplier you select.
2. Post: (1) the contract and (2) a paragraph on why you chose that vendor to the Discussion Board, Contract Drafting Project, by the due date and time (see Canvas). In posting the contract, you will have the opportunity to take a look at the work of your fellow classmates.  Please feel free to post positive comments about your classmates work but this is not required.

Drafting Tips:

A critical point to remember about a contract is that it is designed to be a legally enforceable promise.  It must, therefore, clearly set forth the content of such promises as well as each parties’ respective rights and obligations so that the parties may understand what is required of them and so that a judge/arbitrator/jury can understand what the contract requires and determine if/when one party has breached.  When dealing with a transactional contract, be sure to make obligations mutual, as appropriate.

A contract should be as thorough and precise as reasonably possible because anticipating issues can help avoid them down the line.

The language used to memorialize your agreement into a written contract should be simple and easily understandable.  Shorts words and sentences are preferable to long words and sentences.

Be sure to recognize the difference between mandatory language (shall, will, must) and permissive language (may, might, can).  Key terms should be expressly defined within the contract the first time they are used within the contract or in a “Definitions” section in the beginning of the contract.

The provisions should be organized in paragraphs and each paragraph should clearly convey only one idea or point in the agreement.  Related provisions should be organized logically (for example, obligations set forth chronologically).

The signature blocks for each party should be correct.

Most contracts follow this structure in logical sequence: