Contract Drafting Techniques

by Charles E. Heiden*

     The individual who writes a reinsurance contract infrequently will probably start by securing an existing contract and amending, updating and filling in as judgement dictates. Rarely, however, will the result be satisfactory. Such an approach, derisively known as "cut-and-paste," is at best only as good as the contract dissected.

     This chapter is designed for the person who expects to draft reinsurance contracts regularly. As to equipment needed, a word processor with memory storage is helpful.

Uniformity of Style Desirable

     Long-term advantages accrue to an organization when all employees are subject to the same general operating rules. In contract writing this can be as simple as following the same format for contracts. Uniformity of this sort can be particularly helpful because many specific references are made to contracts in the course of a year. For example, frustrations are avoided when a drafter can locate a subject in a certain sequence. Terms should also be used uniformly. For example, using "reinsured," "company," and "cedent" interchangeably throughout a contract may not hinder an experienced person, who recognizes that each term describes the same party; however, this lack of uniformity can cause mistakes when a novice is involved.

    Margins and spacing should be set to accommodate the filing system used, otherwise, file fasteners can obscure the top line, or the beginning of each line, or even the page numbers. For the same reason, if the file is secured at the top, the pages should be numbered at the bottom.

       Each page of the contract should be identified with a preassigned code for the ceding company, the specific contract, and the effective date. Revised pages should also be identified by the date of the . . .

* Retired Vice President in charge of the Treaty Department at Sullivan Payne Co., 1501 4th Avenue, Seattle, Washington 98101, now in a consulting capacity with the firm on a regular but reduced scheduled.

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