14+ Contract Templates -Word, Apple Pages, Docs
It’s frustrating when someone makes a promise but fails to fulfill it. This is one of the reasons why a contract is prepared to legally bind the contracting parties for the successful execution of an activity. It also helps safeguard the resources of a company in the event of a dispute.
Contracts are crucial documents that state the expectations of the parties involved as well as the details on how certain situations may be resolved. Given its significance from a legal standpoint, the contract must be written clearly and accurately for it to serve its purpose.
Elements of a Contract
To create a contract that is legal and enforceable, take note of the following elements:
1. Offer: A contract should always come with an offer. This acts as a proposal from one party to another, discussing the terms and arrangements that will take place once an agreement is made. If the offer is to purchase a car, the price, specifications, and warranty details of the transaction must be included. The other party is also given the privilege to accept, reject, or amend this offer.
2. Acceptance: This can be done in writing, in person, or over phone. What’s important is that the acceptance is communicated to the offering party through an obvious declaration.
3. Consideration: This pertains to something that is of value to either parties in the contract agreement. It doesn’t always have to involve money, as a property, service, action, or promise can already possess sufficient value to each party. This usually covers an exchange that both parties may benefit from as well.
4. Competence or Capacity: This refers to a party’s ability to take part in a contract. For one, a party must be at least 18 years of age to legally enter into a contract. Mental illness is another reason for incapacity, as someone with a certain disease or disability may not fully understand the terms and conditions of a contract. During such instances, the said party has the right to revoke his acceptance of an offer.
5. Mutual Consent: If both parties have the legal capacity to freely consent to a contract, then the terms and arrangements stated in the document may be executed.
6. Legality: Keep in mind that a contract is only valid if the activity it covers is legal. A contract that requires a certain party to commit a criminal act is not enforceable by law. So if the activity specified in the document is considered illegal in the area you are in, the contract serves no purpose. You may also see business contract examples.
7. Writing: While not all contracts need to be in writing, written contracts are required in certain circumstances in order for it to be enforceable, particularly those that involve a financial transaction.
19+ Contract Templates
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How to Make a Contract
Though its tempting to use a letter or a handshake agreement to seal the deal, verbal agreements aren’t something to rely on when it comes to addressing significant business operations. So to help you write an enforceable contract, follow the guidelines given below:
1. Name the parties: Some people make the mistake of writing the name of a representative of the entity instead of the actual entity. Unless you’re running a business as a sole proprietorship, it’s best to enter the name of your business entity to make the organization liable as a whole.
2. Define the scope: Identify the scope of the project you are to provide along with a proposed timeline for its completion. It’s important to be as specific and detailed as possible to give readers an idea of what is set to occur. If possible, provide a tentative time schedule for each phase of the project as well. Time and amounts of payments must also be indicated in the document.You may also see contract examples
3. Determine the length of the contract period: Contracts usually last for a specific span of time, such as six months to a year. Once the contract ends, each party can opt to sign again under the same terms or have the contract altered for a valid reason. Knowing the length of your contract will provide you enough time to proposed changes in areas that aren’t working well, or to decide whether to end the working relationship without breaking the ongoing agreement.
4. Specify how disputes will be handled: Disagreements are natural in a relationship. But if both parties fail to resolve these issues together, things can get pretty messy. Thus, it’s important to note down how you plan to handle disputes when they happen.
5. Sign and date the contract: Finalize the document by having both parties sign and date the contract. This will prove that each party has understood and agreed to the terms stated in the document.
Tips for Developing a Professional Contract
The right contract can allow parties to embark in various business ventures with clients or collaborators who can contribute to the growth and development of the organization. So to make crafting these documents a lot easier, here are a few things to remember:
- Keep it simple: Contrary to what many believe, using legal terms in a contract is not a requirement. You can write in standard English for everyone to understand what’s written in the contract. Keep in mind that overly complex documents leave room for ambiguity and misinterpretation, so you might want to stick with short, clear sentences and numbered paragraph headings instead.
- Deal with the right person: When negotiating a business agreement with a company, make sure you’re talking to the person in charge. This is someone who is authorized to make drastic decisions for the company and has a vested interest to see the organization perform its obligations accordingly. This could be the owner of a small business, or the chief executive officer or chief operating officer of a large corporation.
- Spell out all the details: A detailed contract is usually the most effective one. Whatever is found in the four corners of the document is considered valid in the world of court law. So if you forget to include something important in the contract, you can prepare a written amendment to record these changes.
- Develop a mutual agreement: Arriving at a decision that you all agree on won’t be easy. A few disagreements will make it difficult for you to finalize your contract, which may only prolong the process even further. The only way to settle this is to meet each other halfway. Negotiate on terms that either of you disagree with and see what you can do to solve this issue.
- Ensure confidentiality: A contract typically contains sensitive information about the parties involved. Due to the potential risks you’ll likely be exposed to, the agreement must see to it that each party will keep important business information strictly confidential even after the contract’s period has ended. A non-disclosure agreement can be valuable for companies that have a lot to lose.
Types of Contracts
When forming an agreement with another party, it’s important to know what type of contract will best suit your purpose. That being said, let’s take a closer look into each type:
- Written Contracts: Written contracts set out the details of what was agreed, such as the materials, time frames, and payments that need to be made. Because of this, they provide certainty which helps minimize possible risks in the event of a dispute or breach. Having a record of what was agreed will also guide both parties in understanding what needs to be done, how it should be done, and what happens if either party fails to abide to it.
- Verbal Contracts: Verbal contracts are only applicable in certain instances. While a handshake agreement may still serve as a contract, it may be difficult to enforce in court. This is because the rights and obligations of each party aren’t clearly specified for them to prove. This is one of the reasons why some arrangements are made partly verbal and partly written instead.
- Standard Form Contracts: In a standard form contract, terms and conditions are set in advance, leaving little to no room for negotiation. One good example would be an employee contract where employers leave information such as names, dates, and signatures completely blank until they have chosen a candidate for the position. These contracts tend to contain legal fine print and terms that the other party may not fully understand.
- Period Contracts: Some workers are only hired by a company to perform a particular task from time to time. Contractors, as they are called, are required to sign these documents in order to establish a business relationship with their hirer. This is most common in the building and construction industry as most projects are carried out only for a given period of time.
What does a contract do?
By definition, a contract is a voluntary and legally binding agreement made between two or more parties. This can cover anything from an employment to a sale or lease. It is used to enforce an agreement in which the concerned parties’ responsibilities are defined and understood. The terms and conditions of the agreement must be also be stated in a clear and detailed manner. This will ensure that those involved are comfortable with respect to the relationship.
Do you need a lawyer to write a contract?
A simple contract can be written without the presence of an attorney. It can be a written or oral agreement, just as long as the two parties can agree between themselves and settle on the contract’s terms. However, lawful and enforceable are two different things that must be understood. Though a verbal contract isn’t illegal, it can only be enforceable if it is in writing. Given how complex the rules of law can be, consulting your lawyer is still a recommended approach.
Is a handwritten contract legally binding?
It’s not unusual for a small business to write out a few contracts by hand, but the verdict as to whether these handwritten contracts are legitimate or not would depend on various circumstances. Despite this, as long as the documents spells out specific details about the terms of contract and both parties have signed to seal this agreement, then the contract may be considered as legally binding and enforceable in court. If you’re concerned about the situation you are in, it’s always best to contact your business litigation lawyer for professional advice.
So there you have it! Solidify your next business agreement by making a formal contract with the help of the professionally made templates provided in this article.