Commercial contract drafting

Commercial contract drafting in South Africa is the discipline of converting a commercial deal into a clear, enforceable written agreement that allocates risk, defines obligations, and limits future dispute — anchored in South African common law and the parties’ right to freedom of contract, and overlaid by specific statutes (the Consumer Protection Act 68 of 2008 in B2C contexts, the National Credit Act 34 of 2005 for credit agreements, the Companies Act 71 of 2008 where companies are parties, and the Protection of Personal Information Act 4 of 2013 where personal information is processed). Effective drafting prioritises clarity of language over legalese, consistency in defined terms, deliberate allocation of risk rather than silence on it, and forward-looking provisions for dispute, insolvency, and regulatory change — the starting point is always the deal, not a template.

Why Drafting Matters: The Purpose of a Commercial Contract

A commercial contract converts a business deal into a self-contained enforcement document. When a dispute arises, the court or arbitrator decides the matter on the contract’s terms — not on what was loosely agreed at meetings, and not on what the parties assumed they had agreed. The written agreement is the record, and the record is the law between the parties.

The contract allocates risk deliberately. On any point the draft is silent on, common-law interpretation rules will default in a particular direction — usually against the party who should have raised the issue and did not. Silence is not neutral; it is a position taken by default.

Good drafting gives the parties certainty on price, performance, timing, and exit, and anticipates failure modes — delay, breach, insolvency, regulatory change — so the parties do not have to litigate from first principles.

Core Drafting Principles

The discipline rests on a small set of drafting principles that hold across every commercial agreement, from a once-off sale of goods to a multi-year master services agreement:

• Plain English first. Clarity beats legalese. Every defined term should earn its keep; if a defined term is used only once, it usually does not need to be defined at all.
• Consistency of language, structure, and cross-references. A contract must read as one document, not as a set of stitched-together sections. Numbering, defined-term style, and cross-references should not drift between clauses.
• One idea per provision. Compound clauses bury obligations and frustrate later interpretation. A clause that does two things usually does neither well.
• Defined terms used consistently. No silent synonyms. The parties either mean “the Service Provider” or “the Supplier” — switching between the two creates ambiguity the other side will exploit in a dispute.
• Future-proofing. Draft for scenarios not yet on the table: disputes, insolvency, change of ownership, regulatory change, and exit. The contract that only deals with the happy path is the contract that breaks first.
• Drafting to be read by a judge or arbitrator. Disputes turn on plain meaning, not on what the parties thought they meant. If the words can be read two ways, the other side will read them the wrong way.

The Anatomy of a Commercial Contract

A well-structured commercial agreement follows a predictable architecture. Most of the variation between deal types shows up in the operative provisions and the risk-allocation section; the rest of the contract is largely standardised.

1. Title and parties. Each party is correctly identified by full registered name and, where applicable, registration number. A wrong party name is the most common and most fatal drafting error — the contract may not be enforceable against the entity you actually wanted to bind.
2. Recitals / background. Context only — recitals are not where obligations live. A court reads recitals as background, not as enforceable promises.
3. Definitions and interpretation clause. The engine room. Every defined term used consistently thereafter, and the interpretation clause governing how the document is read (singular includes plural, headings are for convenience only, references to statutes include amendments).
4. Operative provisions. Subject matter, payment, performance, delivery, acceptance, milestones, and reporting.
5. Risk allocation. Warranties, indemnities, limitation of liability, insurance, and the carve-outs between them.
6. Compliance and regulatory references. The statutory overlays triggered by the deal (CPA, NCA, POPIA, sector-specific).
7. Duration, termination, and exit. Fixed term, renewal mechanics, termination for cause versus termination for convenience, and the consequences of termination (payment for work done, return of materials, survival of confidentiality).
8. Boilerplate. Governing law (South African law by default), domicilium and notices, severability, entire agreement, no waiver, assignment, and counterpart execution.
9. Signature and execution block. Duly authorised signatories, witness requirements where applicable (for example, suretyships), and a company resolution if a juristic person is signing.

Clauses That Are Commonly Drafted Badly

Six clauses come back more often than any others when disputes land in litigation. Each has a characteristic failure mode and a better drafting pattern.

Clause	Common drafting failure	What good drafting looks like
Indemnity	Vague as to scope, who indemnifies whom, and what is excluded.	Clear trigger, capped or uncapped and stated, exclusions listed, and the indemnity aligned with the limitation-of-liability clause.
Limitation of liability	Generic cap regardless of risk, or no cap at all.	Cap tailored to deal value and risk profile; carve-outs for fraud, gross negligence, and IP indemnity; tested against CPA fairness where the agreement is B2C.
Force majeure	Open-ended trigger, no notice requirement, no relief ceiling.	Defined events, notice period, mitigation obligation, exhaustion period, and a termination right if the force majeure event runs on.
Termination for convenience	Hides the consequences; conflates termination for convenience with termination for cause.	Explicit consequences (payment for work done, return of materials, survival clauses) and a clear separation from termination-for-cause triggers.
Confidentiality	Open-ended duration, no return or destruction obligation.	Defined duration, surviving exceptions, written return or certified destruction, and a survival clause that outlasts termination.
Entire agreement	Swallows prior representations unintentionally.	Wording that excludes liability for misrepresentation only where truly intended, aligned with the remedies under the contract.

South African Statutory Overlays to Plan Around

South African common law gives the parties broad freedom to draft the deal they want. Statutes cut across that freedom in specific, deal-dependent ways. A drafter who does not know which statutes apply to the deal is a drafter who will draft past them.

Consumer Protection Act 68 of 2008 (CPA)

Applies to B2C transactions once the supplier threshold is met. The CPA’s fairness, transparency, cooling-off, and reasonableness tests strike down harsh terms, including unconscionable exclusions of liability and unreasonable cancellation clauses. The Act does not apply to a transaction where the consumer is a juristic person whose asset value or annual turnover exceeds the threshold determined under section 5(2)(b).

National Credit Act 34 of 2005 (NCA)

Imposes registration and disclosure requirements on credit providers, with cost-of-credit disclosures and a cooling-off regime applying to qualifying credit contracts. A credit agreement concluded by an unregistered credit provider (where registration was required) is unlawful, and the credit provider may not approach a court to enforce it.

Companies Act 71 of 2008

Governs the capacity and authority of signatories and the formalities for execution by a juristic person. Under section 15, a document is validly executed by a company if signed by a person authorised by the company, by two directors, or by a director and the company secretary. The Act also regulates related and interrelated agreements and the contractual capacity flowing from them.

Protection of Personal Information Act 4 of 2013 (POPIA)

Sets the conditions for lawful processing of personal information. Sections 11 to 14 govern the lawful bases for processing — consent, performance of a contract, compliance with an obligation imposed by law, and protection of a legitimate interest. Commercial contracts that involve any personal information now routinely include data-processing schedules to allocate the POPIA obligations between the parties.

Tax Administration Act 28 of 2011

Drives withholding-tax obligations in cross-border agreements, including the “pay-and-collect” mechanism that can render the South African party jointly and severally liable for tax it cannot recover from a foreign counterparty.

Sector-specific overlays

Financial services (FSCA), healthcare (HPCSA / OHSC), telecoms (ICASA), mining (DMRE), and others. Where the deal touches a regulated industry, the relevant sector regulator’s licensing and conduct rules sit alongside the common-law contract.

The Drafting Workflow: From Deal to Execution

Drafting is a process, not a moment. The shape of the agreement follows the discipline with which the drafter moves through these seven steps.

1. Information gathering. Understand the deal structure, the parties, the jurisdiction, the sector, and the risk profile before drafting. A draft that begins before the deal is understood is a draft that has to be rewritten.
2. Structuring. Decide the contract architecture: a single agreement, a master agreement with order forms, a framework plus call-offs, or an ad-hoc one-off. The architecture drives the drafting.
3. Drafting from a clean base. Start from the deal. A recycled template carries the assumptions of an earlier transaction, and those assumptions will surface in a dispute.
4. Internal review. Consistency, defined terms, internal cross-references, and a sanity check on risk allocation. The review is where most drafting errors are caught.
5. Negotiation. Track changes deliberately. Redlines need to be read, not accepted wholesale — the change a counterparty makes to a sub-clause usually signals the risk they are worried about, and that signal matters more than the redline itself.
6. Execution. Capacity, authority of signatories, witness requirements where applicable (for example, suretyships), and a board resolution where a juristic person signs.
7. Post-execution. Filing and registration where required (credit agreements under the NCA, notarial work for suretyships) and onboarding into the contract register so the agreement is searchable, reviewable on its anniversary dates, and not lost to a departing employee.

When to Engage a Specialist Commercial Drafting Attorney

Most business owners will, at some point, be tempted to draft or sign a contract without a lawyer’s input. That is occasionally fine for a low-value, low-risk, once-off deal. Outside those narrow circumstances, the risk profile changes and so does the answer:

• The deal involves significant value, long duration, or material risk allocation. The higher the stakes, the more expensive it is to discover an ambiguity mid-dispute.
• Multiple parties or jurisdictions are involved — domestic or cross-border. Each additional party or jurisdiction is an additional conflict-of-laws question.
• The other side is represented and is putting their own draft on the table. A counterparty-drafted agreement is always written in the counterparty’s favour; the only question is by how much.
• The deal touches a regulated industry or triggers a statutory overlay (CPA, NCA, POPIA, FSCA). Each overlay carries its own enforcement and penalty regime.
• The contract will be relied on across many transactions — master agreements, framework agreements, standard trading terms. A drafting error in a template is a drafting error repeated across every deal that uses it.
• You want a fixed-scope review instead of an open-ended redline exchange. A specialist can deliver a written risk report on someone else’s draft in a defined scope; a generalist exchange of redlines rarely does.

Burger Huyser Attorneys’ commercial practice is set up for exactly this mix of work — single high-stakes transactions and recurring template-style agreements — run by specialist consultant J’Retha van Rensburg and admitted attorney Mari Köhne, with the litigation and tax-adjacent bench the firm carries feeding into the contract work where dispute exposure or regulatory consequence is foreseeable.

Frequently Asked Questions

What makes a commercial contract legally binding in South Africa?

A commercial contract is binding when there is a valid offer and acceptance, the parties have capacity to contract, the subject matter is lawful, and the parties genuinely intend to be bound — most commercial contracts do not require any specific form unless statute or the contract itself prescribes one. Some contracts (credit agreements under the National Credit Act, suretyships, and long-term leases of immovable property) must be in writing and signed to be enforceable, and the form requirements must be met on the document actually signed.

Can I use a template commercial contract for my business?

A template can be a starting point, but it is rarely a safe final product. Templates do not know your specific deal, counterparty risk profile, regulatory overlay, or termination triggers, and most template contracts fail under dispute because they were never tailored to the underlying transaction. A template also will not reflect post-2024 amendments to POPIA, the Companies Act signatory changes, or the CPA’s fairness doctrine in B2C contexts.

How long does it take to draft a commercial contract?

A straightforward contract (basic services agreement, NDA, simple sale of goods) typically takes a few days once the deal terms are agreed. A complex commercial agreement — multiple parties, cross-border elements, regulatory overlay, or significant risk allocation — usually takes several weeks of drafting, review, and negotiation. The pace is set by the deal and by the negotiation cycle, not by the drafter.

What’s the difference between drafting and reviewing a commercial contract?

Drafting is creating the contract from the deal terms (usually the first paper on the table). Reviewing is reading someone else’s draft to flag risks, gaps, ambiguities, or unfavourable positions before signing. Both require the same drafting discipline, but the brief and the risk profile are very different — a review is often the higher-stakes engagement because the structure and risk allocation are already locked in.

What does a commercial drafting attorney charge?

Fees are typically quoted on a per-document basis after a short scope conversation. Drafting from scratch costs more than reviewing an existing draft, and complex or cross-border agreements cost more than standard B2B agreements. Burger Huyser Attorneys gives a transparent fee conversation up front so cost is not a surprise mid-engagement; the firm does not charge for the first scope call.

When does a commercial contract cross into needing a notary or conveyancer?

Contracts over immovable property (sale, long lease, mortgage), notarial contracts such as suretyships, and deeds required to be registered in a deeds registry must be executed before a notary public. Burger Huyser Attorneys has a qualified notary and conveyancer on staff (Amanda le Roux at the Bedfordview branch) and can handle the notarial layer alongside the drafting layer.

Commercial contract drafting is one of Burger Huyser Attorneys’ core service lines. The firm drafts, reviews, and negotiates commercial agreements, shareholders’ agreements, lease agreements, and company-related contracts for clients across Gauteng, and was awarded Commercial Law Firm of the Year 2025 (5 Star Lawyers Awards) and Best Multi-Sector Law Firm 2023 (Johannesburg, Acquisition International Legal Awards). The firm carries a 4.8/5 average across 250+ Google reviews (Trustindex verified — “Top Rated Law Firm in South Africa”). Brief the Randburg head office on 011 888 0246 to scope the deal, or contact the branch closest to you (full branch addresses and after-hours bail numbers are on the firm’s website). Quotes are given on a per-document basis after a short scope conversation, and the firm does not charge for the first intake call.