Make Contract

Need a make a contract for your next project? Smart move. A well-crafted legal agreement ensures both parties are on the same page while protecting their rights.

The article below outlines what you need to know about making a written contract:

What Is a Written Contract?

Written contracts are legally binding documents between two businesses for defining a contractual relationship. You can use these legal documents to address relationships, sales, transactions, and more. Contract drafting skills are essential when making an agreement since legal mistakes may result in unintended future consequences.

How To Make a Contract – Step by Step

Making a contract starts by understanding the particulars of the agreement and how local contract laws apply. Misapplication can result in costly legal mistakes. Ensure you have a solid approach in place for each and every agreement.

Here’s a general step-by-step process for making a contract:

Step 1. Identify the Parties and Contract Start Date

Written agreements must explicitly identify the contracting parties. Ensure that yours include the following details at a minimum:

• Business name
• Contact information
• Mailing and physical address
• Primary contact name

You should also add the agreement date. The agreement date indicates when the contract started, which is typically the signing date.

Step 2. Define Project Scope and Conditions

Contracts are akin to the “fine print” of your relationship with the other party. Your agreements must be as transparent as possible. The objective is to establish defined expectations.

While it may seem excessive, it is critical for you and your clients to delve into those precise specifics. You don’t want to feel obligated to work outside of scope, and you certainly don’t want your customers to believe they aren’t receiving for what they paid. Negotiate business contracts thoroughly to avoid this situation.

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Step 3. Set Terms of Consideration

Consideration is the compensation you give or receive in exchange for products or services, typically in the form of cash, equity, or other assets. There are several factors to consider when setting payment terms in your written contracts , including:

• Billing practices
• Hours available
• Payment schedule
• Project deliverables
• Service hours worked

Step 4. Describe the Project’s Timeline

You’ll also want to explicitly define any project deadlines, such as project milestones and final deliverables. If the client supplies materials, explain what you need and the deadline by which you require it. Get as detailed as possible about the project timeline to help prevent disputes.

Step 5. Add provisions that Protect Your Rights

Projects don’t always go as planned. You’ll want to make sure your company is protected if something goes wrong.

Several clauses can help you achieve this objective, such as:

• Termination clause
• Intellectual property (IP) rights clause
• Taxation clause
• Choice of law clause
• Dispute resolution clause

After drafting your contract, it’s ready for signing. Contracts are only valid if all parties sign them.

Here’s a pro tip : get your contracts signed in blue ink and retain the original so it’s more challenging for the other party to dispute the contract’s validity.

What’s Typically Included in a Contract?

Almost every industry uses contracts . Their options and flexibility allow businesses to create clauses that are applicable across multiple sectors. However, you should always seek legal advice for company, industry, and transaction-specific clauses.

Below, we have listed five provisions found in most contracts as well as how they work:

Term 1. Confidentiality

Confidentiality provisions prohibited one, some, or all parties from divulging specific information, such as trade secrets and intellectual property. This clause will also allow an aggrieved party to pursue damages should this situation arise.

Term 2. Contract Damages

Use damages clauses to deter other parties from breach of contract actions. You can stipulate that events, such as failure to perform or deliver, can result in other liquidated damages as a penalty.

Term 3. Dispute Resolution

Dispute resolution clauses detail a party’s options if a conflict arises. You can specify that parties file a claim in civil court or attend mediation or arbitration. These types of alternative dispute resolution (ADR) tend to be faster, cheaper, and off of public records.

Term 4. Force Majeure

Force majeure is a concept that protects parties from situations beyond their control. These situations usually include “acts of God,” natural disasters, and pandemics. Your force majeure clause ensures that you are not responsible for breaches related to these events.

Term 5. Governing Law

Governing law clauses establish which jurisdiction’s rules apply to the agreement. Companies most commonly set the governing laws as the same location as their headquarters.

Common Types of Contracts

Contracts address a wide range of personal and commercial transactions. Some are more common than others. While contact titles are usually self-explanatory, their nuanced uses aren’t always readily apparent.

Reviewing the list of common contract types below to learn more about which one is right for your needs:

Type 1. Asset Purchase Agreement

Asset purchase agreements (APAs) are contracts that exist between a buyer and a seller. They transfer asset ownership in exchange for compensation. The seller has control over which assets to sell and which to keep.

Type 2. Commercial Lease

Commercial leases are agreements between a property owner or manager and a business tenant. The property owner signs the agreement as the lessor, and the tenant is the lessee. Upon activation, the lessee has rights and obligations to uphold.

Type 3. Confidentiality Agreement

Confidentiality agreements are contracts that require one or more parties to keep proprietary information confidential. Employers typically use these agreements within the context of an employee or vendor relationship. An example of a confidentiality agreement is a non-disclosure agreement .

Type 4. Joint Venture Agreement

Joint venture (JV) agreements exist between two parties to achieve a common goal. You should include details, such as members, responsibilities, goals, and project dates. Unlike a partnership agreement, JV agreements only last until the end date.

Type 5. Partnership Agreement

Partnership agreements , also known as partnership contracts, are contracts between two or more people who want to collectively manage and operate a business for profit. Each partner is personally or professionally liable for the partnership’s debts. However, they also share a portion of the partnership’s profits and losses.

Type 6. Sales Contract

Sales contracts exist between a client and company when selling an asset. These agreements assure both parties that delivery will occur in exchange for payment. Upon satisfaction of contractual obligations, the client becomes the owner of the new asset or property.

Type 7. Service Contract

Service contracts are similar to sales contracts. However, instead of describing the details of the sale of a product, they relate to services offered by a business. For example, landscapers and web designers routinely use service contracts throughout their business.

Contract Creation Fees

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

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

How Long Does It Take to Make a Contract?

It takes between a week and a few months to make a contract. However, the time it takes you to make a contract depends upon several factors, including project scope, jurisdiction, and the number of parties involved. A contract negotiation and management strategy can help mitigate inefficiencies.

Can I Make My Own Contract?

You can definitely make your own contract! The most practical approach is working with business lawyers from the outset. A signed contract carries legal implications, which means you should understand your rights and obligations for a better result.

Do you need help making a contract? Post a project in ContractsCounsel’s marketplace to get free bids from quality lawyers to review and compare. All of the lawyers in ContractsCounsel’s marketplace are vetted by our team and peer reviewed for you to explore before hiring.