How to Create A Legally Binding Contract
In today's economy, it is a likely possibility that your family or friends may need a loan. While you may want to help, you should also protect your interests. If you are not able to give the money or services away, it is important to have a written contract. Here are the steps to ensure that the agreement is legally binding.
Other People Are Reading
Instructions
-
-
1
Two essential elements in a contract are:
-Agreement between all parties on the terms
-Explicit identification of services, goods, or money to be exchanged or paid -
2
All parties should have a copy of the written contract. Oral contracts are difficult to prove and sometimes memories are faulty.
-
-
3
The contract should have a date of when the exchange should be made. If there is a loan, you must specify how the loan is to be repaid. For instance, if someone borrows $500 and agrees to pay $100 a month, they must abide by those terms. If they deviate in any way, it would be considered a breach of contract. Include interest terms if applicable.
-
4
List acceptable remedies if the person cannot fulfill the contract. For instance, "If you fail to pay on time, you will return my lawnmower."
-
5
Both parties must sign and date the agreement. This will make it a binding contract.
-
1
Tips & Warnings
To have a legally binding contract, you need the following:
Offer
Acceptance
Explicit Terms
Signature and Date
Depending on the size of the value of the contract, you may want have witnesses. In some instances, it may be a good idea to consult a lawyer before entering into an agreement.
