Frequently Asked Questions about Contract Drafting and Review
by Counseal Team
Updated April 17, 2025
Picture this: You’ve just secured a game-changing deal for your startup in Lagos. The excitement is palpable, and the champagne is calling—but before you pop that cork, have you locked down the contract? If not, you might be celebrating too soon.
In Nigeria’s dynamic business landscape, contracts are more than mere formalities—they’re the foundation of every successful business relationship. Without a solid contract, you’re essentially navigating the complex Nigerian market without a safety net. This comprehensive guide walks you through essential questions about contract drafting and review, helping you protect your interests while building strong business partnerships.
What is Contract Drafting and Review?
Contract Drafting
Contract drafting is the art of creating clear, legally-binding documents that outline agreement terms between parties. Whether it’s a lease agreement in Victoria Island, a vendor contract in Aba, or a partnership deal in Abuja, proper drafting ensures everyone understands their obligations and rights under Nigerian law.
Contract Review
Think of contract review as conducting a thorough property inspection before purchase. This meticulous process examines every clause to ensure alignment with your interests and compliance with Nigerian legal standards. It’s your safety net, catching potential issues before they become real problems.
The Impact on Nigerian Business
In Nigeria’s entrepreneurial ecosystem, from tech startups in Yaba to manufacturing ventures in Kaduna, well-crafted contracts provide essential protection by:
- Clarifying expectations and deliverables
- Protecting intellectual property rights
- Establishing clear payment terms
- Defining dispute resolution procedures
- Ensuring compliance with local regulations
Essential Elements of a Contract
Every valid contract in Nigeria must contain these crucial elements:
1. Offer and Acceptance
A clear proposition and unambiguous agreement between parties. For example, a specific proposal to supply palm oil at stated prices and terms to a manufacturing company in Lagos.
2. Consideration
The exchange of value between parties. This could be monetary (like payment for services) or non-monetary (such as exchanging technical expertise for market access).
3. Intention to Create Legal Relations
Both parties must intend to enter a legally binding agreement. This distinguishes formal business arrangements from casual agreements made over suya and drinks.
4. Legal Capacity
Parties must have the legal authority to enter into contracts. This includes age requirements and mental capacity under Nigerian law.
5. Legality of Purpose
The contract’s objective must be legal under Nigerian law. This is particularly important in regulated industries like fintech or telecommunications.
Contract Drafting Guide
Step-by-Step Process
- Define Purpose and Scope
- Clearly outline objectives
- Specify deliverables
- Set clear boundaries
- Identify Parties
- Use complete legal names
- Include registration numbers
- Specify authorized representatives
- Outline Key Terms
- Payment schedules
- Delivery timelines
- Performance metrics
- Quality standards
- Dispute resolution procedures
Common Drafting Pitfalls
1. Ambiguous Language
Instead of “reasonable time,” specify “within 14 working days.” Replace “satisfactory quality” with “meeting ISO 9001 standards.”
2. Incomplete Terms
Ensure coverage of:
- Agreement duration
- Termination conditions
- Force majeure clauses
- Confidentiality requirements
3. Regulatory Oversight
Consider industry-specific regulations:
- Tech startups: data protection laws
- Manufacturing: environmental compliance
- Financial services: CBN regulations
Get the Inside Track on Nigerian Business Opportunities
Join 1200+ successful entrepreneurs who receive our exclusive “Business of Nigeria Report.” Twice weekly, unlock:
- Market-ready opportunities
- Expert compliance guidance
- First access to deals
Plus Get Dele’s renowned market commentary with every issue.
Contract Review Essentials
The Review Process
Step 1: Initial Assessment
- Verify parties and legal status
- Confirm agreement type
- Check jurisdiction
Step 2: Detailed Analysis
- Review obligations
- Examine payment terms
- Assess risk allocation
- Verify compliance
Step 3: Risk Evaluation
- Identify liabilities
- Review indemnification
- Check insurance requirements
- Assess termination conditions
Focus Areas for Review
1. Commercial Terms
- Pricing structures
- Payment schedules
- Performance metrics
- Service level agreements
2. Risk Management
- Liability limitations
- Indemnification provisions
- Insurance requirements
- Force majeure clauses
3. Operational Aspects
- Delivery timelines
- Quality standards
- Reporting requirements
- Performance reviews
Tools and Resources
Digital Solutions
1. Contract Management Platforms
Counseal (counseal.com/start) offers:
- Specialized Nigerian business tools
- Automated compliance checks
- Template library
- Electronic signatures
2. Document Management
- Version control
- Easy retrieval
- Document security
- Collaboration features
Real-World Application
Case Study: Lagos Fintech Success
A Lagos-based fintech startup navigated international partnership through:
Challenge:
- Multiple jurisdictions
- Complex regulations
- Tight timeline
Solution:
- Digital contract management
- Standardized templates
- Thorough reviews
Result:
- Successful launch
- Clear expectations
- Minimal disputes
Implementation Guide
Getting Started
- Assess Needs
- Audit existing contracts
- Identify pain points
- Determine resources
- Establish Processes
- Create workflows
- Set approvals
- Implement controls
- Deploy Tools
- Select platforms
- Train team
- Monitor effectiveness
Conclusion
In Nigeria’s dynamic business environment, effective contract management is crucial for success. Whether you’re a startup in Yaba or an established business in Port Harcourt, proper contract drafting and review protect your interests while fostering strong business relationships.
Take the next step in professionalizing your contract management. Visit counseal.com/start to access specialized tools designed for Nigerian businesses.
Get the Inside Track on Nigerian Business Opportunities
Join 1200+ successful entrepreneurs who receive our exclusive “Business of Nigeria Report.” Twice weekly, unlock:
- Market-ready opportunities
- Expert compliance guidance
- First access to deals
Plus Get Dele’s renowned market commentary with every issue.
Remember: The quality of your contracts today shapes the success of your business relationships tomorrow. Invest in getting them right.
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Real Estate Business in Nigeria: A Guide to Getting Started
Strategies for Managing a Nigerian Business Remotely
