How to Type Up a Business Contract: A Comprehensive Guide

Typing up a business contract may seem daunting, but with the right approach, it can be a streamlined process. This article will guide you through the essential steps of crafting a legally sound and effective contract.

Understanding the Core Elements of a Business Contract

Before you even open your word processor, grasp the fundamental elements that constitute a valid and enforceable contract. These elements are the bedrock upon which your agreement stands. Think of them as the essential ingredients in a recipe – missing one can spoil the whole dish.

• Offer: A clear and definite proposal made by one party to another. This offer must outline specific terms and conditions.
• Acceptance: Unconditional agreement to the terms of the offer by the other party. Acceptance must mirror the offer exactly; any changes constitute a counteroffer.
• Consideration: Something of value exchanged between the parties. This could be money, goods, services, or even a promise. The key is that each party receives something of benefit.
• Legal Capacity: All parties involved must be legally competent to enter into a contract. This means they must be of sound mind, of legal age, and not under duress or undue influence.
• Legal Purpose: The contract’s purpose must be legal and not violate any laws or public policy. A contract for illegal activities is void.
• Mutual Intent: All parties must have a genuine intention to be bound by the terms of the agreement. This intent is typically demonstrated through their words and actions.

Step-by-Step Guide to Typing Your Business Contract

Now, let’s delve into the practical steps of putting your contract into writing.

1. Choose Your Tools and Templates

Start by selecting your preferred word processing software (Microsoft Word, Google Docs, etc.). While starting from scratch offers maximum customization, using a contract template can save time and ensure you cover essential clauses. Numerous online resources offer templates, but always review and adapt them to your specific needs.

2. Identify the Parties Clearly

The first section should explicitly identify all parties involved. Use their full legal names and addresses. If the parties are businesses, include their legal structure (e.g., LLC, Inc.) and the state where they are registered. For instance: “This agreement is made as of [Date] by and between [Company A Name], a [State] [Legal Structure] with its principal place of business at [Address] (“Company A”) and [Company B Name], a [State] [Legal Structure] with its principal place of business at [Address] (“Company B”).”

3. Define the Scope of Work or Services

Clearly and precisely describe the goods, services, or work being provided under the contract. Be specific and avoid vague language. Include details such as:

• Specific deliverables: What exactly will each party provide?
• Timelines and deadlines: When will each deliverable be completed?
• Performance standards: How will the quality of the work be measured?

For example: “Company A agrees to provide web design services to Company B, including the creation of a fully functional website with [Number] pages, responsive design for mobile devices, and integration with Company B’s existing CRM system. The website will be completed and delivered by [Date].”

4. Outline Payment Terms

This section is crucial. Specify:

• The total price: How much will the goods or services cost?
• Payment schedule: When will payments be made (e.g., upfront, milestones, upon completion)?
• Payment method: How will payments be made (e.g., check, wire transfer, credit card)?
• Late payment penalties: What happens if payments are late?

Example: “Company B shall pay Company A a total fee of $[Amount] for the web design services. $[Percentage]% shall be paid upfront as a deposit, $[Percentage]% shall be paid upon completion of the homepage design, and the remaining $[Percentage]% shall be paid upon final delivery and approval of the website. Late payments will incur a penalty of [Percentage]% per month.”

5. Include Essential Legal Clauses

These clauses protect your interests and address potential issues:

• Termination Clause: Describes the conditions under which the contract can be terminated by either party.
• Confidentiality Clause: Protects sensitive information shared during the course of the agreement.
• Intellectual Property Clause: Clarifies ownership of any intellectual property created during the contract.
• Liability Clause: Limits the liability of each party in case of breach of contract.
• Force Majeure Clause: Excuses performance due to unforeseen events beyond a party’s control (e.g., natural disasters).
• Governing Law Clause: Specifies the state or jurisdiction whose laws will govern the contract.
• Dispute Resolution Clause: Outlines the process for resolving disputes (e.g., mediation, arbitration, litigation).

Consult with an attorney to ensure these clauses are tailored to your specific situation and jurisdiction.

6. Review and Revise Carefully

Once you’ve typed up the contract, review it meticulously. Check for errors in grammar, spelling, and punctuation. Ensure that all terms are clear, unambiguous, and consistent. Have another person review the contract as well to catch any mistakes you might have missed. This is the most crucial step.

7. Get Legal Advice

Consulting with an attorney is highly recommended, especially for complex or high-value contracts. An attorney can review the contract to ensure it is legally sound, protects your interests, and complies with applicable laws. While legal advice involves an added cost, it will save you money in the long run if there is any legal dispute.

8. Signatures and Dates

Once all parties are satisfied with the contract, it’s time to sign and date it. Ensure that all signatories have the authority to bind the respective parties. Include a space for each party’s signature, printed name, and title.

9. Keep a Copy

Make sure to keep a copy of the signed contract for your records. It’s best to keep both a physical and digital copy.

Frequently Asked Questions (FAQs)

1. What is the difference between a contract and an agreement?

While often used interchangeably, a contract is generally considered a legally binding agreement, enforceable by law. An agreement may or may not be legally binding, depending on whether it meets the requirements of a contract.

2. Can I use a handshake agreement instead of a written contract?

While verbal agreements can be legally binding in some cases, they are often difficult to prove and enforce. A written contract is always preferable, as it provides clear documentation of the terms and conditions.

3. What is boilerplate language in a contract?

Boilerplate language refers to standardized clauses that are commonly included in contracts. These clauses often cover topics such as governing law, dispute resolution, and severability. While boilerplate language can save time, it’s important to review it carefully to ensure it’s appropriate for your specific situation.

4. What does “breach of contract” mean?

Breach of contract occurs when one party fails to perform their obligations under the contract. This can include failing to deliver goods or services, failing to make payments, or violating confidentiality agreements.

5. What are some common remedies for breach of contract?

Common remedies for breach of contract include:

• Damages: Monetary compensation to cover losses caused by the breach.
• Specific performance: A court order requiring the breaching party to perform their obligations under the contract.
• Rescission: Cancellation of the contract, returning the parties to their original positions.

6. What is an amendment to a contract?

An amendment is a formal change or addition to an existing contract. It must be in writing and signed by all parties to the contract.

7. What is the difference between mediation and arbitration?

Mediation is a non-binding process in which a neutral third party helps the parties reach a mutually agreeable settlement. Arbitration is a more formal process in which a neutral third party (the arbitrator) makes a binding decision.

8. How long should I keep a copy of a contract?

The length of time you should keep a contract depends on the nature of the agreement and applicable laws. As a general rule, keep contracts for at least the duration of the agreement plus the statute of limitations for breach of contract claims in your jurisdiction. Also, permanently retain copies of significant contracts, such as those related to intellectual property, real estate, or mergers and acquisitions.

9. Can I make changes to a contract after it’s been signed?

Yes, but only with the written consent of all parties. Any changes should be documented in a formal amendment to the contract.

10. What is an “executed” contract?

An executed contract is a contract that has been signed by all parties and is legally binding.

11. What is consideration, and why is it important in a contract?

Consideration is something of value exchanged between the parties to a contract. It is a crucial element because it demonstrates that each party is receiving something in return for their promises. Without consideration, a contract may not be enforceable.

12. Is it okay to use online contract templates without consulting an attorney?

While online contract templates can be a helpful starting point, they should never be used without careful review and adaptation. Templates are generic and may not adequately address your specific needs or comply with applicable laws in your jurisdiction. Consulting with an attorney is always recommended to ensure that your contract is legally sound and protects your interests.