Understanding real contracts: a guide for smart contracts coders. Part 2.

Editor’s Note: This is an installment of a series of articles providing background to smart contracts coders about how contracts work in real life. The articles reference this sample sales contract. This guide is intended for general informational purposes only. If you need legal advice about a specific situation, contact a lawyer.

The second section of a contract is the scope of work. This is where the action is. It describes the promises and obligations of each of the parties. In the sample contract, it’s sections 1 and 2, which describe what’s being sold, when it needs to be delivered and where.

The sample is a contract for the sale of goods, which is a simple business relationship. I send you money, and you send me widgets. In a more complex relationship, the description would be a lot longer than it is in the sample. In some cases, particularly if one party is building something complex for the other party, the terms are put in a document that is attached to the back of the contract. 

Contracts drafters may use the term schedule, exhibit, appendix, attachment or statement of work for this separate document. Don’t get caught up in what it’s called. The names are pretty much interchangeable. They’re used for a couple of reasons. They make the flow of the main part of the contract a little smoother because they move some of the more complex terms to the back of the contract, but the main reason to move terms to a schedule is that there may be a different group of people that are focused on those terms than the terms in the main agreement. For example, if the contract covers the development of software, there may be a separate schedule that will require the attention of software engineers, solution architects and project managers. If the scope of work is in a separate document, these folks can trade drafts while others — lawyers, sales people and the business development team — work on the main sections of the agreement.

The main key to the scope of work section is to ensure it’s accurate and complete. If you’re the one providing the goods or services, you’ll want to make sure it doesn’t promise more than you intend to deliver. If you’re the one buying the goods or services, you’ll want to make sure it doesn’t promise less than you think you’re paying for.

Next up: Part 3 — The Money