Contract writing can be a complex task; determining whether all points have been clearly explained, terms defined and obligations fulfilled. However, contract writing doesn’t have to be a difficult ordeal. Once you have determined all of the details, the rest lies in organizing everything into an easy to read document.
I write contracts on a periodic basis and currently manage over 150 active contracts. When I first started writing contracts, I was worried because I didn’t necessarily know all of the legal terms. However, after writing a few, I learned it’s not all that difficult to write a contract if you are prepared and follow some guidelines. Below are some tips that have proven to be helpful to me.
- Keep the language simple. While it may sound impressive to use legalese such as “witnesseth” or “heretofore,” most people do not use those words in regular conversation and by incorporating confusing words into a contract, you can confuse all parties involved as to what the contract actually encompasses. Stick with standard language that clearly spells out the terms of the contract. Spelling and grammar errors of any sort are unacceptable.
- Keep it personalized. While it can be helpful to use a previous contract as a template, make sure that you have personalized each and every point on a contract for the party for which you are writing the contract. The last thing you want to do is share confidential information from an existing contract with a new contract or to include information that does not make sense to the new contract.
- Keep it detailed. Details do not equate to long paragraphs; paragraphs can be difficult to read when you are looking for specific details. Bullet point where necessary, spell out specific details of the contract including dates, specific services, quantities, dollar amounts, shipping, obligations, requirements, deadlines, etc; If something is important or specific, it should be stated clearly in the contract.
- Keep it professional. While you don’t need to use archaic Old English language in contract writing, it is still necessary to be formal. Stick to one standard font, use high-quality graphics and print it on high-quality paper. If you don’t take it seriously, why should the other party? Make sure your company is represented in the most professional manner through this contract.
- Keep the formatting organized.The better you lay out the contract, the easier it will be to read and follow. Here is a general format that can be followed for contracts:
- Header: include logos of both parties if applicable; title the contract such as “Agreement between Party A and Party B;” and include the current date
- Introduction: A short paragraph summarizing the basis for the contract, i.e. Party B agrees to uses Party A’s products exclusively or Party B will provide a specific service for Party A.
- Obligations: This is a bulleted, two-part section that spells out the specific details of each party’s obligations. If a service or product is required, list it in detail and include delivery or completion deadlines. If payment is dependent on a service or quantity purchase, make that clear. Include a payment schedule with dates and amounts.
- Clauses & Remedies: This section spells out what to do if a situation arises that may affect the contract, such as poor quality products or services or immoral action by one of the parties that can tarnish the reputation of the other and what will be done to remedy the situation. Perhaps one party will be allowed 60 days to remedy the situation to the other’s satisfaction or both parties can agree to terminate the contract if a particular situation arises. Also see my blog post on moral turpitude clauses.
- Term: This is a short section to define the term of the contract. Again, make this as clear as possible, i.e. “This contract shall remain valid for a period of three (3) years commencing June 1, 2012 and expiring May 31, 2015.” If you would like to include verbiage on renewal as well, this would be the section to do it.
- Signatures: A contract means nothing if it is not signed by those authorized to do so. Make sure the person signing has the authority to enter into the agreement. Include the names, companies (if applicable), titles, and signing dates for both parties.
- Footer: Since contracts are often more than one page, I like to include the page number at the bottom (i.e. “page 1 of 4” to show the total number of pages). Any other pertinent information can be included here, such as confidentiality (Confidential – Do Not Copy), date and/or company address.