Believe it or not, you don’t need a network of attorneys or a Harvard law degree to write your own legal contract.
Chances are, you’ve been asked to sign a contract at some point in your life (like when you started a new job or rented an apartment). But there may also be times when you’ll want to write a contract of your own, like if you hire an independent contractor or start working as a freelancer.
Writing your own contract can save you lots of money in attorney fees, as well as time, because you’ll likely get deals done faster.
What Is a Contract?
A contract is a legally enforceable agreement made by two or more parties. Contracts may be written or spoken, but those that are written are much easier to uphold in court.
Usually, contracts involve an exchange of goods, services, or money, such as employment contracts or lease contracts.
Legal Requirements for a Contract
Under U.S. law, in order for a contract to be legal, it must have the following qualities:
- Mutual assent: This simply means that a valid offer has been made and accepted between two parties (like selling a car).
- Adequate consideration: Each person brings something to the exchange (money, goods, services, etc.).
- Capacity: All parties entering into the contract must be free and able to agree to the terms (you might say “in their right minds”). Contracts signed by minors and mentally incapacitated individuals (including those who are intoxicated at the time of signing) are not valid.
- Legality: The contract must meet all jurisdictional requirements (established by whichever court has jurisdiction; a contract that’s made in California may not be enforced in Florida).
It’s not necessary to have a contract notarized in order for it to be legally binding (the same goes for wills and other important documents). However, getting your contract notarized can help a great deal if any of the parties decide to dispute the agreement. (We’ll discuss more on handling eventual disputes in the steps below.)
Alternatively, you can have a witness (neutral third party) present to also sign the document.
How to Write a Contract
Below are 9 tips that will help you write a contract. For the best and most accurate advice, however, be sure to consult a legal expert.
1. Make sure it’s actually written.
While some oral agreements are legal and binding, they don’t often hold up in court and are rarely enforceable—which is why it’s very important that you get your contract in writing.
This way, in case of a disagreement, there’s a document that clearly spells out everyone’s rights and obligations, and while disputes may still happen, they won’t be on a “he said, she said” basis.
Understand that whatever is in the contract is what courts will look at in the event of a dispute, so any changes also need to be clearly noted and signed on by both parties.
2. Sometimes simpler is better.
Believe it or not, a legal contract doesn’t have to read like it was pulled straight from a Law and Order script.
You really can just use plain English and short, clear sentences. Not only does this make writing the contract easier, but it ensures that all parties can clearly understand their obligations without having to pay thousands for an attorney to translate it.
3. Talk to the person in charge.
Nothing would be worse than spending hours negotiating the terms of a contract, only to find out that the person you’re negotiating with didn’t really have the authority to agree to anything.
If you’re dealing with a business or organization, before you get started on the details of a contract, make sure you’re dealing with someone who can actually bind the company in a legal agreement, and that they have a vested interested in making sure their party holds up their end of the deal.
If you’re not sure whom you should talk to, just ask!
4. Define important terms.
Make sure to clearly define important terms, such as who the parties are and how they will be referred to throughout the contract.
Always use the full and correct legal names of all parties involved. This applies to individuals and businesses alike, suffixes and all.
Have all parties verify the spelling of their names, and be sure to include the right suffix for a business or organization (LLC, Inc., etc.).
Also define other important terms, such as services, payment methods, etc. so that there can be no confusion about what’s expected of both parties.
5. Spare no details.
When it comes to spelling out the terms of your contract, this is a case where less is rarely more. Remember: even if you discussed something verbally and shook on it, if it’s not in the contract, it will be nearly impossible to uphold.
If you remember to include something after the contract has been signed, you can create an amendment. Or, if you’ve yet to sign the contract, you can simply handwrite the changes into the document. If both parties initial the change, it will become an official part of the contract.
6. Spell out payment obligations.
Be sure to clearly state which party is expected to pay (in money, services, or other system of trade), the amount, and the due date for payment.
Think carefully about what’s acceptable to both parties. For example, can payments be made in installments? (If so, specify how much and how often). When is payment expected? Only when the job is completed, or half up-front? These are important considerations that should be discussed and clarified when you write your contract.
7. Decide what could terminate the contract.
All parties should come to an agreement about what types of situations could terminate the contract. In other words, under what circumstances could one party exit the deal without being legally on the hook for violating the signed agreement?
You might decide the contract can be terminated if one party misses too many deadlines, or the other party fails to make the first payment on time. These are just examples; think about what makes the most sense for your specific deal.
8. Agree on how to settle disputes.
Although you certainly hope nothing goes wrong, it’s always good to have a plan in place just in case something does.
Agree on how you want to settle any eventual disputes. Keep in mind that going to court can be very costly and time consuming, so you may want to consider meditation or arbitration, where a neutral third party settles the dispute outside of courts.
9. Choose a jurisdiction.
If you and the other party in the contract are located in different states, you should choose one of the state’s laws to govern your contract.
This will save you time and lots of headaches in the event that there are any disputes down the line.
What Is an Example of a Simple Contract?
A simple contract is a contract that is made orally or in writing, distinguishing it from a contract made under seal, which carries an irrefutable presumption of consideration.
Simple contracts can be used for many types of agreements, including:
- Rental or lease agreements
- Commission agreements
- Event planning agreements
- Independent contractor agreements
- Retainer agreements
- Non-disclosure agreements
- Safety contracts
- Vendor contracts
- Employment contracts
Get Legal Advice
Whether you’re a freelancer working with a new client or a property owner renting out your holiday apartment, having a well-written contract can help ensure that your business goes as smoothly as possible.
Did you find this post helpful? Let us know in the comments below!