The contract scoping brief | MBM Valkyrie Advisory

There is no such thing as a standard agreement, because there is no such thing as a standard bargain. Two parties, two purposes and two risk appetites produce one specific arrangement — and the contract either records that arrangement precisely or it records something else, which is where disputes come from.

Templates are not the enemy; unexamined templates are. A precedent is a starting structure that saves time on the plumbing. It becomes dangerous the moment it is signed without anyone asking whether it describes what the parties actually agreed, and whether the legislation that governs this kind of arrangement has been accounted for.

The label on a contract does not determine its legal nature. What the parties actually do will.

That is the failure worth naming first. An agreement titled “independent contractor” that describes control over working hours, supervision and integration into the organisation may well be treated as employment, with everything that follows. A document called a “memorandum of understanding” that contains obligations, consideration and sufficient certainty may well be a binding contract. Naming a document does not classify it.

So before drafting begins, these are the questions. If you can answer them, drafting is quick and the result is precise. If you cannot, the contract is not yet ready to draft — and knowing that is the most useful thing this page can tell you.

Section A

The parties

Most contracting errors that end badly begin here, and they are entirely avoidable.

Who exactly is contracting? The registered legal entity, not a trading name or a brand. Full name, registration or identity number, and legal form.
If a group is involved, which company in the group carries the obligation? The contracting entity and the entity with the assets are not always the same one.
Who signs, and on what authority? Board resolution, delegation of authority, or mandate — and does that authority cover a transaction of this value?
Does any signatory or decision-maker have a personal financial interest to declare? Directors’ interests must be handled before signature, not explained afterwards.
Where is each party’s address for formal notices? A real, serviceable address. Notice clauses are relied on precisely when relations have broken down.

Section B

The bargain

Write it in plain words first. If the commercial deal cannot be stated in three sentences, it is not yet settled between the parties.

What is each party actually giving, and getting?
What precisely is being delivered — scope, quantity, standard, location? Detail belongs in a schedule. The schedule is not an annexure to the deal; for most practical purposes it is the deal.
What does “done properly” look like, and who decides? Acceptance criteria, and what happens if work is rejected.
What is expressly excluded? The exclusions prevent the slow expansion of scope that nobody agreed to.
What must the other party provide for performance to be possible? Access, information, decisions, approvals — and the consequence if they do not arrive.
How are changes agreed and recorded? Without change control, arrangements drift and nobody can say when the extra work became part of the deal.

Section C

Money

What is the price, and is it fixed, rate-based or capped?
What triggers an invoice — a date, a milestone, or acceptance?
What is the payment period, and from when does it run? From invoice date, or from receipt of a valid invoice? The difference is real.
Is VAT applicable, and is the price stated inclusive or exclusive?
What happens on late payment — interest, suspension of performance, or both?
Are there escalations, and on what basis? Annual, indexed, or by agreement — and what happens if the parties cannot agree.
Who bears disbursements, travel and third-party costs?

Section D

Time

When does it start — on signature, or on a stated date?
How long does it run, and does it renew automatically?
What notice ends it, and may either party end it without cause?
What counts as a breach, and how long does the defaulting party have to remedy it?
Which obligations survive termination? Confidentiality, personal information, warranties and payment usually should.

Section E

Risk

Every contract allocates risk. The only question is whether it does so deliberately.

What can realistically go wrong, and who should carry each of those risks?
Is liability capped, and are there carve-outs from the cap?
Are there indemnities, and are they mutual or one-way?
Is insurance required, at what level, and must it be proved?
What counts as force majeure, and what happens if it persists?
Are penalties or agreed damages intended? If so, they should bear a sensible relationship to the prejudice actually anticipated.

Section F

Information and assets

Who owns what is created under the agreement, and who may use it afterwards?
What is confidential, for how long, and what may be disclosed?
Will personal information be processed by one party for the other? If so, written operator terms and security safeguards are required, not optional.
What happens to data, records and materials at the end?
Are there restraints, exclusivity or non-solicitation terms — and are they reasonable in scope, area and duration?

Section G

Law, disputes and exit

Which law governs, and where are disputes heard?
Is there an escalation path before formal proceedings — and is mediation or arbitration intended?
How are notices validly given, and does email count?
What must happen on exit? Handover, transition assistance, return of property and data. Negotiated cheaply at the start; expensively at the end.
Is signature electronic, and is that appropriate for this document?

Section H

The legislative check

Not every framework applies to every agreement — but each should be consciously considered and ruled in or out, rather than never raised. Which of these bite here?

Companies Act 71 of 2008: Authority to contract, directors’ personal financial interests, and transactions requiring shareholder approval.
Consumer Protection Act 68 of 2008: Where the other party is a consumer or a smaller juristic person, plain-language and fairness requirements may apply.
National Credit Act 34 of 2005: Where credit, deferred payment or interest-bearing arrangements are involved.
Protection of Personal Information Act 4 of 2013: Operator arrangements, security safeguards, and any cross-border transfer of personal information.
Labour Relations Act 66 of 1995 and the Basic Conditions of Employment Act 75 of 1997: Where an arrangement described as contracting may in substance be employment.
Electronic Communications and Transactions Act 25 of 2002: Electronic conclusion and signature, and the documents excluded from electronic signature.
Conventional Penalties Act 15 of 1962: Where penalties or agreed damages are stipulated.
Competition Act 89 of 1998: Where exclusivity, restraints or arrangements between competitors are contemplated.
Sector-specific legislation: Financial services, health, construction, public procurement and others impose their own mandatory terms.

Answered them, and want the agreement drafted?

Complete the brief and send it through — it is exactly the information needed to draft, review or negotiate the agreement properly, and working from it makes the process considerably faster.

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This brief is general guidance on contracting practice, not legal advice on any specific agreement. Which legislation applies, and what a particular contract must contain, depends on the parties, the subject matter and the sector. No professional relationship arises from using it.

The contract scoping brief.