How to Write a Legal Contract
Contracts are an important part of business, so important, in fact, that the framers of the Constitution explicitly barred Congress from interfering with them. There are, however, laws and legal traditions that specify what features constitute a valid contract. In general, contracts create a template under which work can be done or goods exchanged. A valid written contract provides a record that can be enforced by a court if necessary.
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Instructions
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Reach an agreement. Written contracts are viewed by courts to represent a "meeting of the minds," and to simply codify an existing agreement. Therefore, contracts are only written after negotiations and after an agreement is reached. Though certain assumptions or conditions can be contained in the contract, these should be mutually understood.
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Identify the parties. A contract can only be entered into by capable entities, usually corporations and individuals over 18 years of age. Mental incapacity or intoxication can render a person unable to enter into a binding contract. Thus, identifying the parties, usually at least by name and address, is a crucial element. The date is also important, as the ability of parties to enter contracts can fluctuate.
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Make an offer. In its most basic form, a contract is an offer from one party to another for some kind of payment in return for goods or services rendered. For a written contract to be valid, it must have an offer that defines the subject matter in clear terms and represents a real agreement. Further, the party making the offer must commit to the terms and not be merely acting irrationally out of fear or anger.
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Accept the offer. The reciprocal aspect of a valid offer is acceptance. The party who will provide goods or perform work agrees to do so according to the offer, and the contract should stipulate the precise conditions that satisfy his responsibilities under the contract. Some contracts are written with a delayed acceptance so that the terms of the offer are only triggered when the second party begins performance. The offering party can also stipulate how he must be notified of completion of work under the contract.
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Provide consideration. Another essential element of a contract is consideration, which, in addition to cash, can be any right, interest or benefit that accrues to the party that accepts and performs. Consideration can also be any loss, detriment or forbearance by the offering party. To be valid, the consideration of a written contract must be in exchange for work that is current or future but not past. It must be legally binding on the offerer and should not be so one-sided as to be unconscionable.
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Include a time frame and other conditions. Another important aspect to a contractual agreement is the time frame for which the contract will be in force. A time frame can also be used as a condition for satisfying the offer. Other conditions can be written into the contract, such as those that must occur first before the contract becomes effective, or those subsequent to acceptance that can remove a party from liability under the contract.
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Execute the contract. For a contract to be enforceable, it should be not only signed by the parties or their representatives but also witnessed and, if possible, notarized. Both parties should retain a copy of the executed contract.
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Tips & Warnings
Because contract law can be complex, a written contract for any goods or services of significant value should be written or at least reviewed by a competent attorney.
Though a contract does not have to be written to be enforceable, the writing of contract is assumed to supersede any previous or concurrent oral agreements. In other words, only what's in the contract applies. As the old adage recommends, "Get it in writing."
