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Verbal agreements are only as effective as the parties using them. Due to the risks associated with running a business, you must put your contracts in writing. You’ll be glad you did if business disputes arise and the relevant contract comes into question.
The best place to start is by learning more about the process of contract drafting. Here’s everything you need to know:
What Is Contract Drafting?
Contract drafting is a form of legal drafting that involves writing contracts and legal documents. Contracts are legally binding documents that contain terms and conditions and other provisions. Poorly drafted contracts may result in unintended legal consequences, whereas well-structured ones can support profitable and secure business activities.
4 Requirements for a Valid Contract
The contracts your company uses will determine its success. Well-written agreements will protect your company’s rights and offer contingencies when things don’t go as expected. However, you must write a valid contract to utilize these benefits.
The four requirements for a valid contract are as follows:
Requirement 1. Offer
An offer is an acknowledgment that one party makes to the other. It signifies their ability and desire to carry out the contractual obligation. Offers usually include products and services being sold to an individual or entity.
Requirement 2. Acceptance
Acceptance is the other party’s acknowledgment that they accept the offer’s terms and conditions . Any changes to the existing request will require new acceptance from the receiving party. If they disapprove of amendments to the original contract, the element of acceptance goes unmet, and thus, rendering the contract invalid.
Requirement 3. Intent
Although a willingness to buy and sell falls under offer and acceptance requirements, both parties must intend to create a legal relationship. The element of intent means that they agree to carry out their legal obligations unless stated otherwise.
Requirement 4. Consideration
The exchange of consideration is the final component of valid contract requirements. Consideration is the exchange of something valuable with another entity to carry out the terms of the contract. Making a payment, trading equipment, and offering employee stock options for products and services are examples of consideration.
A signed contract carries several legal implications. Small businesses and startups should routinely incorporate these requirements into their contracts while seeking legal advice when questions arise.
Learn more about legal drafting .
How To Draft A Business Contract – Step by Step
Contract drafting is no easy task. While it may be tempting to download a boilerplate template online, we caution you to avoid making this a regular business practice. A contract is only as good as the language it contains, and a free online template will not satisfy your unique needs.
Here are the nine steps you should following when drafting a business contract:
- Step 1 . Determine the contract you need since the wrong agreement will not address your transactions’ unique needs.
- Step 2 . List party names, addresses, company names, and dates at the top.
- Step 3 . Create a statement that acknowledges both party’s consent to the terms and conditions contained within the contract.
- Step 4 . Make a list that describes what you give to the other party, such as services, products, and other promises.
- Step 5 . Draft a paragraph about how the other party plans to pay you for your services or products and the terms by which you will accept it.
- Step 6 . Insert standard provisions that protect your rights, such as nondisclosure agreements, choice of law clauses , and more.
- Step 7 . Write a brief statement about how both parties should handle a dispute, such as through traditional civil procedure or alternative dispute resolution
- Step 8 . Add signature and date lines for both parties to sign.
- Step 9 . Print or email your business contract for signing.
Poorly written contracts will result in additional problems should you get into a dispute with the other party. Ensure that you select the proper agreement for the given situation and always get legal advice when more advanced questions arise. This strategy is far cheaper than getting sued over unintended terms and conditions in your documents.
Common Types of Business Contracts
Business contracts encompass a broad range of agreements. Consequently, it’s challenging for many business owners to know where to begin. The good news is that some arrangements are more common than others and may be the same solution that you need to move forward with your business relationship.
Common types of business contracts that your company can use include the following:
Asset Purchase Agreement
Asset purchase agreements (APAs) are contracts that outline the terms and conditions of purchasing a significant asset. These assets don’t include real estate transactions. The APA will protect your rights when purchasing intangible and tangible goods and services from another person or entity.
Consulting Agreement
Consulting agreements specify the provisions surrounding consultation services. These arrangements contrast sales contracts in that they essentially utilize terms and conditions related to the service industry. Consulting work of any kind should incorporate this type of agreement.
Employment Contract
Employment contracts detail the specifics related to their employment. Commonly used provisions related to compensation, dispute resolution, and confidentiality. These contracts are generally offered to new employees fulfilling key roles and positions within your organization.
Nondisclosure Agreement
Nondisclosure agreements (NDAs) restrict employees from divulging company secrets to external parties. These company secrets usually give the organization a competitive advantage. If the employee violates this covenant, the business owner then has the right to file a claim for damages.
Privacy Policy
Privacy policies let consumers know how you handle their personally identifiable information (PII) collected through websites and applications. These policies inform them of their rights, obligations, and how to opt-out of information-sharing efforts. They are commonly used in the technology sector today, and consumers now expect to see them.
Sales Contract
Sales contacts establish the terms of an asset sale. They lay the foundation for the exchange of consideration between a buyer and seller. Common provisions found in the sales contract include purchase price, delivery dates, and remedies for non-performance.
Service Contract
Service contracts offer a buyer and seller legal protections when engaging in a contractor or vendor relationship. Service contracts are different from employment contracts in that there are special rules surrounding these relationships. Check your local employment laws to determine how they affect your organization and contract drafting efforts.
Terms Of Service
Terms of service (ToS) is a contract found on most applications and websites. The software developer or website owner uses them to set expectations. A ToS will also ensure that you limit your legal and financial liability when people use your software.
Who Provides Contract Drafting Services?
Contract lawyers provide contract drafting services. They are the only professionals who are licensed and insured to offer legal advice. For example, lawyers are not allowed to make any legal mistakes, and if they make one in your contract that causes you damages, you can legally pursue a lawyer for a financial remedy.
Can I Draft My Own Contract?
It’s possible to draft your own contract. However, you should hire contract lawyers to draft your contracts for the same reason most people don’t fix their own cars. They will take on the liability of avoid legal mistakes while ensuring that your agreements are valid and enforceable.
If you need help with contract drafting, post a project in ContractsCounsel’s marketplace and get free bids from lawyers to review and compare. All lawyers in ContractsCounsel’s network have been vetted and include peer reviews for you to explore before hiring.
How To Get Quotes For Contract Drafting
Meet some of our Contract Drafting Lawyers
Curt B.
Curt Brown has experience advising clients on a variety of franchising, business litigation, transactional, and securities law matters. Mr. Brown's accolades include: - Super Lawyers Rising Star - California Lawyer of the Year by The Daily Journal - Pro Bono Attorney of the Year the USC Public Interest Law Fund Curt started his legal career in the Los Angeles office of the prestigious firm of Irell & Manella LLP, where his practice focused on a wide variety of complex civil litigation matters, including securities litigation, antitrust, trademark, bankruptcy, and class action defense. Mr. Brown also has experience advising mergers and acquisitions and international companies concerning cyber liability and class action defense. He is admitted in California, Florida, D.C., Washington, Illinois, Colorado, and Michigan.
Shelia H.
Shelia A. Huggins is a 20-year North Carolina licensed attorney, focusing primarily on business, contracts, arts and entertainment, social media, and internet law. She previously served on the Board of Visitors for the North Carolina Central University School of Business and the Board of Advisors for the Alamance Community College Small Business Center. Ms. Huggins has taught Business and Entertainment Law at North Carolina Central University’s law school and lectured on topics such as business formation, partnerships, independent contractor agreements, social media law, and employment law at workshops across the state. You can learn more about me here: www.sheliahugginslaw.com www.instagram.com/mslegalista www.youtube.com/mslegalista www.facebook.com/sheliahuugginslaw
Steven S.
Steven Stark has more than 35 years of experience in business and commercial law representing start-ups as well as large and small companies spanning a wide variety of industries. Steven has provided winning strategies, valuable advice, and highly effective counsel on legal issues in the areas of Business Entity Formation and Organization, Drafting Key Business Contracts, Trademark and Copyright Registration, Independent Contractor Relationships, and Website Compliance, including Terms and Privacy Policies. Steven has also served as General Counsel for companies providing software development, financial services, digital marketing, and eCommerce platforms. Steven’s tactical business and client focused approach to drafting contracts, polices and corporate documents results in favorable outcomes at a fraction of the typical legal cost to his clients. Steven received his Juris Doctor degree at New York Law School and his Bachelor of Business Administration degree at Hofstra University.
Rhea d.
Rhea de Aenlle is a business-savvy attorney with extensive experience in Privacy & Data Security (CIPP/US, CIPP/E), GDPR, CCPA, HIPAA, FERPA, Intellectual Property, and Commercial Contracts. She has over 25 years of legal experience as an in-house counsel, AM Law 100 firm associate, and a solo practice attorney. Rhea works with start-up and midsize technology companies.
March 24, 2023
Morgan N.
Morgan is a real estate attorney with six years of experience in residential, land, and commercial real estate transactions. He has experience assisting municipalities, businesses, buyers and sellers in real estate related matters. He has worked on various projects including purchase agreements, contract for deed, easements, mortgages, access agreements, contract/lease review and also title review. Prior to entering private practice, Morgan was a Realtor and assisted buyers and sellers in residential sales and closing services. Morgan provides proactive, responsive and dependable work to each client and project.
March 30, 2023
Bukhari N.
Bukhari Nuriddin is the Owner of The Nuriddin Law Company, P.C., in Atlanta, Georgia and an “Of Counsel” attorney with The Baig Firm specializing in Transactional Law and Wills, Trusts and Estates. He is an attorney at law and general counsel with extensive experience providing creative, elegant and practical solutions to the legal and policy challenges faced by entrepreneurs, family offices, and municipalities. During his legal careers he has worked with entrepreneurs from a wide array of industries to help them establish and grow their businesses and effectuate their transactional goals. He has helped establish family offices with millions of dollars in assets under management structure their estate plans and philanthropic endeavors. He recently completed a large disparity study for the City of Birmingham, Alabama that was designed to determine whether minority and women-owned businesses have an equal opportunity to participate in city contracting opportunities. He is a trusted advisor with significant knowledge and technical experience for structuring and finalizing a wide variety of complex commercial transactions, estate planning matters and public policy initiatives. Raised in Providence, Rhode Island, Bukhari graduated from Classical High School and attended Morehouse College and Howard University School of Law. Bukhari has two children with his wife, Tiffany, and they live in the Vinings area of Smyrna.
April 3, 2023
John M.
John has extensive leadership experience in various industries, including hospitality and event-based businesses, then co-founded a successful event bar company in 2016. As co-founder, John routinely negotiated agreements with venues, suppliers, and other external partners, swiftly reaching agreement while protecting the brand and strategic objectives of the company. He leverages his business experience to provide clients with strategic legal counsel and negotiates attractive terms.
April 1, 2023
Conner H.
Patent attorney with master's in electrical engineering and biglaw experience.
April 9, 2023
Benjamin S.
Benjamin Snipes (JD/MBA/LLM) has 20 years of experience advising clients and drafting contracts in business and commercial matters.
April 14, 2023
Sonya A.
Experienced Attorney with a demonstrated history of working in the law practice industry. Skilled in Preparation of Wills, Trial Practice, Estate Administration, Trusts, and Estate Planning. Strong legal professional with a Juris Doctorate focused in Law from Howard University School of Law.
April 14, 2023
Karen M.
Karen V. Mills is the founding member of the woman-owned boutique law firm Mills Law, LLC, based in Atlanta, Georgia, specializing in contracts, corporate transactional and business law.
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