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What are the Parties?

When drafting a legal agreement, one should pay close attention to the proper description and statement of the parties. This includes the legal names of the individuals (or entities, or in some cases both) that are involved in the contractual arrangement.

Although this may seem basic it is important to get the description and statement of the parties’ right the first time.

Even though you might not normally address someone quite so formally in conversation or a letter (particularly if it is someone you know well) you should still use their full name rather than a shortened version (for example, use “Dr. Robert S. Johnson.” rather than “Bob Johnson”)

One good reason for having a legal agreement in writing is to clarify the terms of an arrangement so there can be NO question about the parties’ intentions later. This is especially so after particulars have changed or forgotten.

Always properly identify the individual parties by the location of their current residence.

For example: Instead of completing the form as “Dr. Robert S. Johnson” state that the party is “Dr. Robert S. Johnson, with a current business address at Suite 4c 101 Brooke Lane, Medicalville Queensland 4000.”

It is absolutely vital to get the names of the entities correct when drafting a legal document.

When dealing with a company, proprietary limited company, or partnership, always request an official—authentic copy of the entity’s articles of association or partnership agreement, respectively, to make sure you have the name correctly.

In some states or territories of the Commonwealth there may be hundreds of thousands of registered business entities. It could be different in New South Wales, Victoria, Queensland, etc, and the subtle differences in a business name can mean that you have made a legal arrangement that may be hard to legally enforce against the entity you thought you were actually dealing with.

For example, you might have prepared a legal contract for a specific business service on behalf of your customer – AAA Pool Supplies. You may think that the correct company name is AAA Pool Supplies Pty Ltd., but the actual name on file with Corporate Affairs may be Triple A Pool Supplies Pty Ltd.

Although this may not seem like a huge difference to you (at the time) a court may have second thoughts about awarding you damages if say your customer fails to pay as expected.

A customer who doesn’t want to pay you under the terms of a contract may also be ready to say: “mate, that contract was not with my company and so I don’t owe you anything.”

Another important issue to consider when drafting an agreement for a business entity is correctly identifying the state or territory of lodgement after the name. For example, use “AAA Pool Supplies Pty Ltd., a Queensland Gold Coast Pty Ltd company” or AAA Pool Supplies Pty Ltd., a Queensland company, with its offices located at 0000 Main Street, Mermaid Beach Gold Coast 4217.”

Always remember that the better you specify the company in the “identification of the parties” the greater the chance of eliminating any misunderstandings down the track.