Construction of Contracts

Valid contracts always include a signature.

The most important aspect of a contract happens before it is agreed to: the construction. Contract structure is critical to its implementation and, most importantly, its protections. If it does not include certain core elements, a contract can be ruled invalid or, worse, it could be weak to enforce.

The Nature of a Contract

A written contract represents an agreement that locks two or more parties into an agreed behavior. Ideally it includes terms that provide protection should one or more of the parties not follow the agreed upon terms. And this element is the fundamental reason why contracts are used--to provide some recourse should someone go against the agreement made. Contracts also can be verbal, but the courts will only enforce verbal agreements for small value amounts. Any contract of substantial value must be in written form.

Negotiation

The first step is to work out the scope of the contract. This involves negotiation with the other party. The terms need to be worked out representing each other's interests and expectations. Being clear and specific is critical. Later on, during performance of the contract, these same terms and parameters will define consistency with the contract or proof of breach. Each party needs to practice their due diligence to make sure the terms are as desired. If a contract is written well, neither party involved will get exactly what they want, but the compromise will benefit both.

Wording

Too often contract language writers get caught up in technical jargon. The best contract construction is instead clear, simple and to the point. Many times if a contract has to be deep in legal jargon, then the intent should be suspect. If it is so buried in legal loopholes, the sincerity of the parties is probably compromised by an expectation of eventually breaking the agreement. This sort of thing is what keeps contract lawyers busy and well paid.

Deliverables

Within the contract language the deliverables section benefits from making sure sufficient detail is included. This is the contract part that spells out what each party is supposed to perform or provide and what will be exchanged for such delivery. If the detail is vague, it frequently leads to confusion and problems. One of the parties finds that delivery is not as agreed and then responds accordingly. This can bring in more lawyers as the disagreement then heats up and usually ends up in court.

Signature

No contract is valid unless it has been properly executed. This action is symbolized by the parties' signature confirming the contract is consciously agreed to.

Signature of a contract to make it valid goes back to ancient times when the Egyptians recorded each other's specific marks on tablets to signify agreement.

To further protect the validity of a signature, some parties rely on additional witnesses' signatures to confirm the parties did sign the agreement. Using this method then confirms with a third party that the contract was agreed to by those signing, regardless of dispute later on saying otherwise.

References

• Duhaime: How to Write a Contract
• Agreement Forms: Agreement Forms
• Next Level Purchasing: Supply Management Contract Writing
• Low Budget Marketing Methods: How to Write a Contract