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Drafting Contracts

Small-business owners, entrepreneurs, and senior-level managers must draft contracts to meet their business needs. As part of running a business, including a startup, you might need to write employment contracts, service contracts, nondisclosure agreements, independent contractor agreements, and joint venture contracts.

These legal documents form the bedrock of many business transactions and business relationships. Of course, some contracts require the expertise of a qualified business attorney.

FindLaw's Drafting Contracts section provides a general understanding of how to write legally defensible contracts. It includes articles on commonly misused contract terms, a primer on contract drafting, and an overview of different types of contracts. It also provides contract templates, such as sample sales agreements and related resources.

Write a Business Contract: Key Considerations

All valid contracts, whether an employment agreement or a service agreement, follow some basic rules. One party forms a contract by offering an exchange of value, which the other party accepts. There are many guides to contract drafting, but there are some key elements that all legal contracts require:

  • Intent to make a contract
  • A lawful subject matter
  • An offer made by one party
  • Acceptance of the offer by the other party
  • An exchange of something of value
  • A written agreement, in some circumstances

A contract does not have to include payment terms to be legally enforceable. As long as a contract includes an offer, acceptance, and consideration, it is legally valid. However, spelling out payment terms avoids confusion and disputes later on. Payment terms explain:

  • The financial obligations of each party
  • When payments are due
  • How to make payments

However, certain types of contracts have statutory payment term requirements. For example, construction contracts often require the inclusion of payment schedules.

Including payment terms is a best practice for most contracts.

Revocation, rejection, and counteroffer determine if parties created a business agreement. You can revoke an offer at any time before acceptance. Once the offer is accepted, an agreement is made. If you agree to keep the offer open for a certain amount of time, you can't revoke the offer until the period is over. Rejection occurs when one party extends an offer, and the other declines the deal. A counteroffer is when a party rejects a proposed agreement and offers a contract with modified terms.

By comparison, accepting a contract, whether an employment contract or a service contract, is simple. A party can accept a contract via several different means, including:

  • Through a clear statement or writing
  • By performing their part of the agreement
  • By promising to perform their part of the agreement
  • Or even if the party begins to perform their part of the bargain incorrectly due to their misunderstanding

How To Write a Business Contract

A business contract provides clarity for parties attempting to record an agreement. When you are one of the agreeing business partners, ensuring you understand the contract terms is wise. Writing your agreement and its terms is an important start. But there are some other basic considerations worth keeping in mind. You should write the contract in language that you clearly understand. Legalese may make the document more confusing.

The written contract should provide details. It should establish what each party will do. It should also establish when their actions should occur. The terms should be clear. Details about when and how one party will pay the other are particularly important. The contract should also provide for confidentiality, particularly when it involves confidential or proprietary information.

A carefully crafted contract will consider state laws. It may explain rights to particular remedies and attorney fees if legal action becomes necessary. It may also include mediation and arbitration clauses to settle a contract dispute.

You Don't Have To Solve This on Your Own – Get a Lawyer's Help

Meeting with a business lawyer can help you understand your options and how to protect your rights, including partnership agreements, purchase agreements, real estate, trade secrets, and intellectual property. Visit our attorney directory to find a lawyer near you who can help with your business law concerns. Or contact a business attorney near you for more legal advice and help handling legal issues concerning contract law.

Visit FindLaw's attorney directory to find a lawyer near you who can help.

Learn About Drafting Contracts

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

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