10 Power Tips on How to Write Up A Contract

A contract is a set of promises that layout an agreement between two parties with mutual obligations enforceable by the law. If one party doesn’t hold their end of the bargain, the other party can sue you to reimburse their losses.

When in business, contracts are necessary because they define the expectation for both you and your client. It’s there to protect both your business and your partner from unforeseen consequences.

An effective contract should be specific and detailed to ensure both parties’ interests are protected in case of a disagreement. However, the process of drafting an agreement may seem appalling. 

In this guide, we’ll give you tips on how to write up a contract and provide contract templates.

1. Request an Outline From your Client

Before you start drafting a contract, ask the other party to prepare an outline of the agreement in their own understanding. You don’t have to write the contract directly from their outline, but it will serve as a blueprint that states their important points.

It also creates a good starting point for addressing other vital issues that they might leave out and should be included.

2. Get it in Writing

Although verbal contracts are legal and binding in many circumstances, they’re usually difficult to enforce in court. Your case will quickly turn to be a “your word against mine” scenario, and it’ll get ugly. Contrarily, written agreements are less risky since they point out each party’s rights and obligations.

3. Keep it Simple and Clear

Legalese ambiguity has caused many contracts to fall apart throughout history. To avoid that, it’s incredibly crucial that you use a clear layman’s language that can be easily read and understood. Avoid flowery legal language like “the party of the first part contracts with the party of the second part.” 

Instead, keep it simple using short, clear sentences and industry-specific. The more details you put into your contract, the more complicated it gets.  If you need to see how to keep your contract simple and straightforward, try out 50+ different types of basic contract templates at CocoSign.

4. Identify the Parties Involved Correctly

This is where you include the parties to the contract and their correct legal names. It’s essential to correctly name the contract’s parties to clarify who is actually bound by the contract.

For instance, if the parties are business entities organized as LLC or a corporation, identify them with the full legal name “Mike’s Pizza, LLC.” Don’t use the names of the people signing the agreement on behalf of the business.

5. Clarify all Details

The body of the contract should spell out the rights and obligations of both parties in detail. If your business practices change after signing the contract, update the contract to reflect your current state with the party with whom you’ve contracted. 

Once you update the contract, upload it to the CocoSign site, which allows you to create easy-to-use, downloadable, editable contracts and send them to the other party for electronic signature.  

6. Include Payments Terms

Always ensure payment terms specify when payments are due, who pays whom, and any conditions for making payment. If you’ve agreed to pay in installments or after a particular milestone is completed, indicate so, including their respective date, time, and requirements. Not forgetting the method of payment.

7. Discuss Contract Termination

Diamonds are forever, contracts, not so much. It’s your job to lay out circumstances that could lead to contract termination. Most contracts should indicate if the parties can terminate at any time or only when there’s a breach of the agreement.

To prevent disputes beforehand, you should consider that it’s a must that the breaching parties receive a notice of their evil deeds and have a chance to set things right.

8. Identify Ways to Solve Disputes

Agree in advance on what you and the other party will do if something goes amiss. To avoid court procedures and attorneys, you can both agree to mediate or arbitrate a contract dispute in advance, which resolves your issues faster and cheaply.

It’s also essential to define who is liable if a dispute arises. Here you state which party will pay legal fees if there are problems.

9. Agree on Which State Law Will Govern the Contract

Suppose you and the other parties come from different states. In that case, it’s advisable to choose only one of your state’s laws to govern the contract, hence avoiding sticky legal wrangling. Besides, it’s important to state where you’ll mediate, arbitrate, or call for legal actions under the agreement.

10. Keep it Confidential

Your agreement with the other party may involve sensitive and private information. In that case, confidentiality is key, so you must include the confidentiality clause. In doing so, the other party will be tied from telling the world about your private information. 

Set out consequences such as amount damages for breach of the confidentiality agreement to strictly enforce the clause. 

Conclusion 

Having a contract in place is the best way to manage expectations between you and your client. To get started, you need a clear understanding of contract law basics, how to manage contracts, and the elements involved. Save yourself from trouble and purchase a contract management software that will attend to your contract needs more efficiently.

This article covers the 10 most effective tips to help you draft your own contracts. We’ve included links to the most common types of contract templates you can try out. Plus, there’s a link that offers e-signature for a fast, reliable way to sign your contracts.

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