Drafting Rules and Governing Provisions for Oil & Gas Agreements

July 2, 2015

The drafting process has certain elements which can sometimes be seen as routine – governing provisions and the mechanics of the contract don’t get as much attention as other issues in a negotiation.  Although these elements of legal service can be seen as immaterial and uninteresting, they can create serious problems when they don’t work. 

We have prepared Drafting Rules and Governing Provisions for Oil & Gas Agreements as a quick reference guide to these issues which is designed to assist counsel in enhancing drafting quality and streamlining the drafting process.

This 19 page publication provides model language for 15 common governing provisions and an explanation of why they should be used, distilling current law and convention into practical recommendations.  It also provides guidance on the drafting process and useful substantive and procedural drafting concepts for document quality control, including:

  • avoiding unintended contracts
  • eliminating outdated provisions and language
  • recognizing common errors that can lead to uncertainty
  • standardizing drafting conventions

In our experience, these are the three highest-value drafting changes that oil & gas counsel should consider.

  • Delete the “time is of the essence” clause.  Unless you really mean to give up the benefit of the entire agreement if you don’t perform an obligation on time, delete this provision.  It has the effect of converting every failure by to perform an obligation on time into an option of the other party to rescind the contract.  Most parties don’t intend this outcome.
  • Makes sure that events have deadlines.  Every future action required to be taken by a party should have a deadline, otherwise serious confusion can arise about when it must be completed.  Consider whether deadlines are realistic, but make sure that the parties know when everything has to be done – and what happens when it doesn’t.
  • Require formal agreement on amendment and waiver.  In many cases it is too easy for a counterparty to argue that an agreement has been amended (or a right waived) through a course of conduct between business parties.  Provide for amendment and waiver only by a written and signed instrument that specifically identifies and names the provision of the agreement that is being amended.

To obtain a copy of Drafting Rules and Governing Provisions for Oil & Gas Agreements, please contact [email protected]. For a two page preview, please click here

DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice.

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