Pitfalls in contract drafting under Norwegian law

The most common pitfalls when drafting contracts under Norwegian law are unclear definitions, inadequate regulation of delivery, unclear provisions regarding breach of contract, and the use of contract templates without adapting them to the specific terms of the agreement. Have you ever signed a contract that you later regretted because a key point wasn’t properly covered? Most contractual disputes don’t arise because the parties disagree on the law, but because the contract was unclear or lacked important information or provisions from the outset. Here, we go through the most common pitfalls in contract drafting under Norwegian law and how to avoid them.

What are the most common pitfalls in contract drafting?

The most common mistakes relate to unclear definitions, ambiguities regarding what is actually to be delivered and when, a lack of provisions governing what happens in the event of a breach, and the contract being insufficiently tailored to the specific circumstances it is intended to regulate. Many contracts are copied from a previous agreement or a template, without the content being adapted sufficiently to the situation at hand.

Why are unclear definitions a common pitfall?

Unclear or missing definitions of key terms create scope for disputes over interpretation. What exactly is meant by ‘delivery’? Is it when the goods are dispatched, or when they are received and inspected? Such questions should be clarified precisely in the contract, so that both parties have the same understanding of when an obligation has been fulfilled.

What should the contract specify regarding the delivery itself?

The contract should describe the delivery in concrete terms – scope, quality and who is responsible for what – rather than merely referring to a general description. When the contract involves the refurbishment of a bathroom, it should specify the scope of the work (is the contractor to demolish old walls and floors; how much is to be demolished – just the panels or also the studwork and insulation); and who is to be responsible for clearing up and removing rubble. The contract must also specify the quality and standard of the work to be carried out, including the dimensions to be used in the reconstruction, the plumbing products and fittings to be supplied for the bathroom, and which products the customer is to supply themselves. It should also specify who is responsible for arranging the services of various tradespeople, such as carpenters, plumbers, electricians and tilers. If this is clearly set out in a quotation, the contract may refer to the quotation. See also our article on what should be included in a building contract for further practical examples.

Also read: Key elements to include in a construction contract

Why should you avoid copying contract templates without adapting them?

A contract template is a good starting point, but never a ready-made solution. If you use a template without adapting it to the specific circumstances, you risk including provisions that do not suit the situation, or that important aspects of this particular contractual relationship are not covered at all. Always go through the template point by point and assess whether each provision is actually suitable for your contract.

What happens if the contract does not adequately cover breaches of contract?

If the contract lacks clear provisions on what happens in the event of delay, non-performance or other breaches of contract, you will have to fall back on Norway’s general contract law rules (bakgrunnsretten), which do not always produce the outcome the parties actually intended. Ensure that the contract itself regulates the consequences of breach, including the right to a price reduction, compensation and, where applicable, termination.

Why are limitations of liability a common pitfall?

Many contracts contain limitations of liability that have been copied from other agreements without the parties having considered what the limitation actually entails in practice. A limitation of liability that is too strict can render the contract worthless the moment something goes wrong, whilst an unclear limitation can create uncertainty as to what liability actually applies.

What should you bear in mind regarding notice periods?

Many contracts have short and strict deadlines for giving notice of claims, without the parties being aware of the consequences of missing the deadline. If the deadline expires, you may lose the right to pursue the claim even if you are substantively in the right. Make sure you familiarise yourself thoroughly with the contract’s notice rules before signing, and establish good internal procedures to ensure compliance with them.

How should you deal with provisions on force majeure and unforeseen events?

You should specifically assess which events could realistically affect this particular agreement, and clearly set out the consequences a force majeure event will have for the parties’ obligations, including whether the agreement can be terminated if the impediment lasts long enough. A common pitfall is precisely to use a standard force majeure clause without carrying out such an assessment.

Why is the dispute resolution clause often overlooked?

The dispute resolution clause often ends up at the end of the contract and receives the least attention, even though it becomes absolutely crucial the moment a dispute arises. Clarify whether disputes are to be resolved through negotiation, mediation, the ordinary Norwegian courts or arbitration, and ensure that the choice is appropriate to the value and complexity of the agreement.

Contract drafting conclusion

Most contractual disputes can be traced back to ambiguities or omissions that could have been avoided with more thorough work when drafting the contract. By being mindful of definitions, breach of contract, limitations of liability and dispute resolution, you reduce the risk of unpleasant surprises later on.Learn more about how we can assist with contract law in Norway. Are you unsure whether your contract contains the correct provisions? Please feel free to contact us for a legal review before you sign.