{"id":4337,"date":"2016-04-04T10:47:27","date_gmt":"2016-04-04T15:47:27","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-contracts-forms\/contract-terms-checklist.html"},"modified":"2024-05-24T01:15:36","modified_gmt":"2024-05-23T20:15:36","slug":"contract-terms-checklist","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/contract-terms-checklist.html","title":{"rendered":"Contract Terms Checklist"},"content":{"rendered":"\n<div class=\"fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30  wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n<div class=\"fl-section-main fl-page-articles fl-section-main fl-section-main-full-width\"><h1 class=\"fl-no-margin-top\">Contract Terms Checklist<\/h1>\n\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/lisa-burden-j-d\/\">Lisa Burden, J.D.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/aviana-cooper-esq\/\">Aviana Cooper, Esq.<\/a>\n                | Last reviewed\n        <time>\n                            May 24, 2024\n                    <\/time>\n    <\/div>\n\n            <div class=\"fl-gutenberg-byline-editorial-note fl-text-sm\">\n            <p>Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n        <\/div>\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n\n\n\n<p>Small business owners deal with many types of contracts every day in their business interactions. Business relationships often demand binding agreements, an exchange of confidential information,\u00a0and some knowledge of business law.<\/p>\n<p>A\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/contract-law.html\">legally binding contract<\/a>\u00a0has several\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/contracts-basics.html\">necessary elements<\/a>:<\/p>\n<ul>\n<li>An offer (a proposal to be bound by certain terms)<\/li>\n<li>Acceptance (agreeing to the terms of the offer)<\/li>\n<li>Parties who have the legal capacity to contract<\/li>\n<li>Lawful subject matter<\/li>\n<li>Mutual agreement (all parties must agree on the terms)<\/li>\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/what-is-consideration-and-how-much-is-required.html\">Valuable consideration<\/a>\u00a0(referring\u00a0to an item or service being exchanged which could be goods, money,\u00a0or a promise to perform a certain act)<\/li>\n<li>Mutual obligation (all parties involved have some obligation or duty under the contract)<\/li>\n<li>A written agreement (oral contracts are valid contracts but oral agreements are hard to enforce because it&#8217;s difficult to prove the contract terms if there&#8217;s a dispute)<\/li>\n<\/ul>\n<p>Although all business contracts are different, there are certain contract provisions that are commonly included. That being said, not all of these provisions will be included in every business agreement. In addition, most contracts will include additional provisions that relate specifically to their particular subject matter.<\/p>\n<p>Here we will focus on what clauses are necessary to form a written contract.<\/p>\n<h2>Common Types of Business Contracts<\/h2>\n<p>There are several\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/common-business-contracts.html\">common types of business contracts<\/a>\u00a0that people enter into every day. These include:<\/p>\n<ul>\n<li>Contracts for the sale of goods<\/li>\n<li>Employment agreements<\/li>\n<li>Consulting agreements for freelancers and independent contractors<\/li>\n<li>Non-compete agreements<\/li>\n<li>Non-disclosure agreements<\/li>\n<li>Real estate agreements<\/li>\n<li>Joint venture agreements<\/li>\n<\/ul>\n<h2>Contract Terms Checklist<\/h2>\n<p>This checklist serves as a general guide to what terms of the contract may be important to include, or at least consider, for your business contracts.<\/p>\n<p><i>Please note that the following checklist is provided for informational purposes only. It is intended to be used as a guide prior to consultation with an attorney familiar with your specific legal situation. This checklist should not be considered a substitute for the advice of an attorney. If you require legal advice, you should seek the services of an attorney.<\/i><\/p>\n<ul>\n<li><b>Identity of the Parties<\/b>:\u00a0Detail whether the parties involved are individuals or business entities. If businesses, specify\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/choosing-a-legal-structure.html\">what type<\/a>, such as partnership or corporation. Be sure to include the address of each party to the contract.<\/li>\n<li><b>Contract&#8217;s Purpose and Assumptions<\/b>:\u00a0Clearly define the reason for the contract agreement and any assumptions underlying the agreement.<\/li>\n<li><b>Contract\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/commonly-confused-contract-terms.html\">Terms<\/a><\/b>:\u00a0Explain the duties of each party, the rights of each party, deliverables, relevant dates, prices, quantities,\u00a0and payment terms. Payment terms should include a description of lump sum payments, COD,\u00a0or installments.<\/li>\n<li><b>Warranties and Disclaimers<\/b>:\u00a0Mention any promises about the product\/service quality. Consider disclaimers about potential issues.<\/li>\n<li><b>Limitations and Liquidated Damages<\/b>:\u00a0Limitations on liability cap the amount a party may have to pay if there is a breach of contract. Liquidated damages are a pre-agreed amount to be paid in case of a breach of contract.<\/li>\n<li><b>Confidentiality and Indemnification<\/b>:\u00a0Confidentiality terms help protect sensitive information. Indemnification clauses outline who bears the cost and responsibility of potential damages or losses.<\/li>\n<li><b>Default and Arbitration Clauses<\/b>:\u00a0These explain available alternatives to litigation if there is a dispute or a breach of the contract terms.<\/li>\n<li><b>Governing Law and Venue<\/b>:\u00a0These\u00a0specify which state&#8217;s law governs the contract and has jurisdiction over lawsuits.<\/li>\n<li><b>Entire Agreement<\/b>:\u00a0This is\u00a0a\u00a0statement that the legal document constitutes the entire agreement.<\/li>\n<li><b>Severability<\/b>:\u00a0This clause allows the rest of the contract to remain valid if a court rules that a particular clause is invalid.<\/li>\n<li><b>Signature Block<\/b>:\u00a0These are signatures of authorized signatories and include official titles and addresses of the parties. If signing on behalf of a Company, be sure to do so appropriately so that you are not personally obligated\/liable to the terms of the agreement.<\/li>\n<li><b>Notarization<\/b>:\u00a0In some cases, notarization is required to verify the signatures on the contract.<\/li>\n<\/ul>\n<h2>Digital Contracts<\/h2>\n<p>Electronic documents and\u00a0signatures\u00a0have become increasingly common. Laws, such as the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), allow the use of electronic records to satisfy any law requiring that information be in writing. Of course, the law requires consumer consent.<\/p>\n<p>It&#8217;s crucial to ensure these contracts are just as legally binding as traditional ones. Make sure they contain the necessary elements of a contract and are signed by all parties involved, even if the signature is electronic.<\/p>\n<p>Some states may have their own requirements for electronic contracts and signatures.<\/p>\n<h2>Check FindLaw&#8217;s Contract Law and Contract Templates Sections for Additional Articles and Resources<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/when-will-a-promise-or-statement-be-considered-a-binding.html\">When Will a Promise or Statement Be Considered a Binding Contract?<\/a><\/li>\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/what-is-the-most-common-legal-remedy-for-breach-of-contract.html\">What Is the Most Common Legal Remedy for a Breach of Contract?<\/a><\/li>\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms\/do-all-construction-contracts-have-to-be-in-writing.html\">Do All Construction Contracts Have to Be in Writing?<\/a><\/li>\n<\/ul>\n<h2>Learn More About Contract Terms by Speaking to an Attorney<\/h2>\n<p>While it&#8217;s important that you understand the legal terms and conditions included in any legal document you draft or sign, sometimes it takes the expertise of a business lawyer to interpret legalese into plain English. A misused or misspelled word, for example, has the potential to entirely change the meaning of a contract. Reach out to a local\u00a0<a href=\"https:\/\/lawyers.findlaw.com\/contracts\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">contracts attorney<\/a>\u00a0to learn more about legal services that include drafting and interpreting your business&#8217;s contracts.<\/p>\n\n\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text fl-text-bold\">Yes<\/span>\n            <i class=\"was-this-helpful__button-icon\">\n                <svg width=\"22\" height=\"22\" viewBox=\"0 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11.8119 19.236 12.01 18.67 12H16M9.00003 14V18C9.00003 18.7956 9.3161 19.5587 9.87871 20.1213C10.4413 20.6839 11.2044 21 12 21L16 12V0.999995H4.72003C4.2377 0.994543 3.76965 1.16359 3.40212 1.47599C3.0346 1.78839 2.79235 2.22309 2.72003 2.7L1.34003 11.7C1.29652 11.9866 1.31586 12.2793 1.39669 12.5577C1.47753 12.8362 1.61793 13.0937 1.80817 13.3125C1.99842 13.5313 2.23395 13.7061 2.49846 13.8248C2.76297 13.9435 3.05012 14.0033 3.34003 14H9.00003Z\"\n                              stroke=\"#666666\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\"\/>\n                    <\/g>\n                    <defs>\n                        <clipPath id=\"clip0_604_3423\">\n                            <rect width=\"22\" height=\"22\" fill=\"white\"\/>\n                        <\/clipPath>\n                    <\/defs>\n                <\/svg>\n            <\/i>\n        <\/button>\n    <\/div>\n    <span class=\"was-this-helpful__taken-action fl-text-sm-bold\"><\/span>\n    <div 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