How To Draft a Contract: 6 Steps to Follow

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 3,416 reviews

Jump to Section

Need help with a Business Contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

If you’ve found this article, then it’s apparent that you’ve learned how powerful legal documents are. Aside from actual work and money paid, a written contract acts as a legal record that a mutually agreed-upon arrangement went into effect. However, the wrong agreement can result in unwanted legal consequences and cause massive problems for the company.

However, the benefit of contracts far outweight their costs. Before getting started, check out our article below on how to draft a contract the right way:

What Is a Written Contract?

A written contract , also called an agreement, is a legal document between two businesses that define a contractual relationship over the course of a transaction. Written agreements are legally binding and contain provisions called clauses . You must hire someone with legal drafting skills and knowledge when creating your written contracts.

How To Draft a Contract – Step by Step

Contracts are a great option when protecting your legal rights. They’re an essential component to major asset purchases and running a business. You should always put a contract in writing since verbal agreements aren’t always enforceable.

Below, we have outlined a step-by-step guide that shows you how to draft a contract:

Step 1. Information Gathering

At the top of the page, write down the names of the people and companies involved in the contract as well as the effective date. For example, “On this 1 st day of October 2021, ABC Company enters into the agreement with XYZ Inc. as contained herein.”

Step 2. List Your Services or Products

Your next task is to describe or list the products or services you’re offering in exchange for payment. Get really specific in this section since general terms are open to interpretation. You don’t want to be on the side of an agreement where a client can press you to perform more work than intended.

Step 3. Determine Term Length

You should also specify how long your agreement will last. Companies can have them end after a certain amount of time, such as 90 days, or offer a more finite contract termination clause date. If your customer is willing to work on an ongoing basis, you may also indicate as such in this section.

Step 4. Lay Out the Consequences

Breach of contract and negligence claims are common in the business world. Ensure that you let customers know what penalties are on the line for non-payment or non-delivery. Ensure that you insert the term “null and avoid” into this section as appropriate so that you no longer have to work with individuals who don’t fulfill their contractual obligations.

Step 5. Determine Dispute Resolution Terms

How will your company deal with disputes as they arise? This question is an important one to address since there are many options. On the one hand, you could permit the traditional methods of civil litigation. Still, on the other, you could enforce alternative dispute resolution measures, such as mediation or arbitration.

Step 6. Create Signature and Date Lines

You can’t have a valid and enforceable contract unless both parties sign on the dotted line. Conclude your signed contract with two signature and date lines for both parties to sign. It doesn’t matter who signs the contract first, nor does the order of signing necessarily infer any advantages.

Meet some lawyers on our platform

Gregory B.

61 projects on CC
View Profile

Lawrence S.

17 projects on CC
View Profile

Keidi C.

6 projects on CC
View Profile

Anand A.

23 projects on CC
View Profile

What’s Typically Included in a Contract?

Written contracts should offer all parties a sense of security and reassurance. You should include commonly recognized terms and formatting that business owners anticipate. It’s also worth the effort to walk the client through your contract’s terms before both parties sign at the bottom.

For the most effective result, here are the elements typically included in a contract:

  • Names and addresses of all contract parties
  • How much money the offering party will receive in exchange for their services
  • Legal purposes and mutual agreement
  • Acknowledgment of competence by both parties
  • Terms and conditions as appropriate
  • Signature and date lines

You should always take ample time to invest in the contract drafting process. No matter how big or small your company is, you need to protect the legal rights of you and your stakeholders. Otherwise, you are exposed to unwanted and unintended consequences that can leave you on the hook for liability.

Common Types of Contracts

Contracts address a wide range of legal issues and can be very powerful when used correctly. Consequently, that means there are several from which you can choose. Gain an understanding of the contract type that you may need by first familiarizing yourself with documents routinely used by people and businesses alike.

Here are a few common types of contracts of which every business owner should be aware:

Asset Purchase Agreement

Asset purchase agreements (APAs) are legally binding contracts used in the commission of making large asset purchases. Types of assets usually include sales of equipment and tools exceeding $500. The only exception to this rule is real estate transactions.

Commercial Lease

Commercial leases establish the terms and conditions between you and a business tenant. These lease types are different from residential leases since they address specific issues related to term length, variable rates, and insurance.

Confidentiality Agreement

Confidentiality agreements are the documents you enact to keep trade secret information private while hiring private employees. As part of your employment agreements , you can ask them to sign confidentiality agreements so that you have legal recourse and options in the event of unlawful disclosure.

Joint Venture Agreement

Joint venture (JV) agreements are the perfect legally binding document when working on a project or business effort with another company. For example, if another company is going to feature your products within theirs, a JV agreement will set the terms related to compensation, licensure, and more.

Partnership Agreement

Partnership agreements were developed for business partners. If you’re part of a partnership, whether general or professional, you must have a partnership agreement in place to avoid unnecessary conflict. This document will help you navigate profit-sharing matters, day-to-day management, and how to handle disputes if they arise.

Sales Contract

Sales contracts are used in the commission of selling a product. They are similar to asset purchase agreements but generally address sales rather than an asset acquisition from a general standpoint.

Service Contract

Service contracts are legally binding agreements that providers can use when offering their expertise to another company. They typically define the scope and depth of the project and payment terms, and dispute resolution processes. Service businesses are always more challenging to protect since they aren’t generally offering a tangible end product, and ambiguity can become the Achilles’ Heel of contractual outcomes.

Contract Drafting Fees

The below contract drafting fee data comes from ContractsCounsel’s marketplace. The table includes 12 popular drafting projects.

Document Type Bid Avg Project Avg
Service Contract $650 $505
Partnership Agreement $875 $625
Single-Member Operating Agreement $525 $450
Multi-Member Operating Agreement $1,100 $950
SaaS Agreement $850 $725
Terms of Service $845 $450
Privacy Policy $500 $450
Employment Contract $650 $500
Consulting Agreement $650 $450
Contractor Agreement $650 $450
Convertible Note $650 $550
Promissory Note $695 $550

All data is flat-fee (not hourly), so the pricing you see below is the total to complete a project. Please note, pricing for projects can vary based on contract type, number of custom terms, and number of revisions needed. The below pricing table includes averages.

How Long Does It Take to Draft a Contract?

The amount of time it takes to draft a contract ultimately depends upon your specific needs. A basic, one-page agreement could take a few days, whereas a lengthy, complex document could take several weeks or months. More significant transactions often involve the negotiation and renegotiation of a deal which can add to your timeline considerably.

Can I Write My Own Contract?

People and businesses can write their own contracts. However, contract law is highly technical and varies by state, province, and country. You should at least speak with business lawyers to learn more about how they could help you and where your signed contracts could be improved.

Do you need to draft a contract? Post a project in ContractsCounsel’s marketplace to get free quotes from vetted lawyers for your project.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Brittany S. on ContractsCounsel
View Brittany
Member Since:
May 6, 2022

Brittany S.

Attorney
Free Consultation
Get Free Proposal
New York / New Jersey
1 Yr Experience
Licensed in NJ, NY
Touro Law Center

I am licensed in New York and New Jersey. I graduated with my J.D. from Touro University Law Center, Summa Cum Laude, in 2021. In 2018, I graduated from SUNY Farmingdale with a B.S. in Sport Management and a minor in Business Management. I have experience in real estate law and insurance defense, including employment law. Please note, I do not carry malpractice insurance.

Zachary J. on ContractsCounsel
View Zachary
Member Since:
May 27, 2022

Zachary J.

Principal
Free Consultation
Get Free Proposal
Crown Point, IN
3 Yrs Experience
Licensed in IL
The University of Michigan Law School

I am a solo-practitioner with a practice mostly consisting of serving as a fractional general counsel to growth stage companies. With a practical business background, I aim to bring real-world, economically driven solutions to my client's legal problems and pride myself on efficient yet effective work.

Michael R. on ContractsCounsel
View Michael
Member Since:
May 30, 2022

Michael R.

Attorney
Free Consultation
Get Free Proposal
Torrance, CALIFORNIA
10 Yrs Experience
Licensed in CA
Whittier Law School (Top 5%)

If you're looking for an attorney who can help your business succeed, look no further! With my experience in the legal field, I can provide you with the legal advice you need with entity formation, contract drafting, business operations, and more, And because I'm committed to providing high quality service, you can be sure that your needs will always be met. Contact me today to learn more about how I can help your business thrive!

Angela Y. on ContractsCounsel
View Angela
Member Since:
June 16, 2022

Angela Y.

Founder and Managing Partner
Free Consultation
Get Free Proposal
New Jersey
7 Yrs Experience
Licensed in NJ, NY
Rutgers University School of Law

NJ and NY corporate contract lawyer and founder of a firm specializing in helping entrepreneurs. With a background in law firms, technology, and world class corporate departments, I've handled contracts and negotiations for everything from commercial leases and one-off sales agreements, to multi-million dollar asset sales. I love taking a customer-focused and business-minded approach to helping my clients achieve their goals. Other information: learning to surf, lover of travel, and one-time marathoner (NYC 2018) yulawlegal.com

Angelica M. on ContractsCounsel
View Angelica
Member Since:
June 12, 2022

Angelica M.

Managing Attorney
Free Consultation
Get Free Proposal
North Carolina
7 Yrs Experience
Licensed in NC
North Carolina Central University School of Law

Angelica McDonald, Esq. has singlehandedly established an in-demand law firm, won several accolades for her incredible work in her community and has her sights set on building a bi-coastal law practice that serves clients from her hometown to Hollywood. She is putting her city of Raeford, North Carolina on the map as the birthplace of the next legal superstar. And she is just at the onset of her career. An astute attorney, Angelica is sought after for her razor-sharp business acumen and her relentless litigation style. With a diverse background in entertainment, media and sports law, as well as business, she represents entrepreneurs and athletes on everything from complex contract negotiation to intellectual property matters, ensuring anything they’ve built is protected.

Jason Q. on ContractsCounsel
View Jason
Member Since:
June 12, 2022

Jason Q.

Attorney / Owner
Free Consultation
Get Free Proposal
Sarasota, Florida
14 Yrs Experience
Licensed in FL
Wake Forest University School of Law

I am a Florida estate planning and probate attorney helping clients achieve their goals through personalized legal strategies. Excellent communication, thorough preparation, and accurate execution are the keys to success.

Michael T. on ContractsCounsel
View Michael
Member Since:
June 13, 2022

Michael T.

Lawyer
Free Consultation
Get Free Proposal
Fairfax, Virginia
32 Yrs Experience
Licensed in DC, MD, VA
College of William and Mary

I have been in practice since 1990 and practice in D.C., Maryland, and Virginia. I am an experienced litigator and look forward to resolving your legal questions as efficiently as possible.

Richard G. on ContractsCounsel
View Richard
Member Since:
June 20, 2022

Richard G.

Attorney
Free Consultation
Get Free Proposal
Greensboro, NC
2 Yrs Experience
Licensed in NC
University of Elon School of Law

Hello! I am an Iowa native trying to bring some Midwest problem-solving to southern civil law. I thoroughly enjoy getting to know the individuals and businesses I assist. I practice estate planning and business formation and, with my litigation experience in mind, I help clients plan to ensure they and their interests are protected in the future.

Danielle G. on ContractsCounsel
View Danielle
Member Since:
July 12, 2022

Danielle G.

Attorney and Founder at Danielle D. Giovannone Law Office
Free Consultation
Get Free Proposal
Schenectady, NY
15 Yrs Experience
Licensed in NY
Fordham University School of Law

Danielle Giovannone is the principal of Danielle D. Giovannone Law Office. In her experience, Danielle has found that many business do not require in-house legal counsel, but still need outside counsel that knows their business just as well as in-house counsel. This need inspired Danielle to start her firm. Before starting her firm, Danielle served as Contracts Counsel at Siena College and as an attorney at the New York City Department of Education, Office of the General Counsel. At the NYCDOE, she served as lead counsel negotiating and drafting large-scale commercial agreements, including contracts with major technology firms on behalf of the school district. Prior to the NYCDOE, Danielle worked as an associate at a small corporate and securities law firm, where she gained hands-on experience right out of law school. Danielle has provided legal and policy advice on intellectual property and data privacy matters, as well as corporate law, formation and compliance, employer liability, insurance, regulatory matters, general municipal matters and non-profit issues. Danielle holds a J.D. from Fordham University School of Law and a B.S. from Cornell University. She is active in her Capital District community providing pro bono services to the Legal Project, and has served as Co-Chair to the Niskayuna Co-op Nursery School and Vice President of Services to the Craig Elementary School Parent Teacher Organization. Danielle is a member of the New York State Bar Association.

AHAJI A. on ContractsCounsel
View AHAJI
Member Since:
July 8, 2022

AHAJI A.

Attorney
Free Consultation
Get Free Proposal
Houston, TX
23 Yrs Experience
Licensed in NC, TX
Indiana University - IUPUI

Ahaji Amos, PLLC is a Houston-based intellectual property and civil litigation firm servicing clients throughout the U.S.

Michael J. on ContractsCounsel
View Michael
Member Since:
July 14, 2022

Michael J.

Partner
Free Consultation
Get Free Proposal
Warren, New Jersey
14 Yrs Experience
Licensed in NJ, NY
New York Law School

Combining extensive experience in litigation and as general counsel for a real estate and private equity company, I provide ongoing guidance and support to clients on a variety of transactional matters, including business formation, partnership agreements, corporate agreements, commercial and residential leasing, and employment issues.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call