How to Draw Up a Business Contract

Always start with the business transaction date.

Most people would like to rely on trust and honor for business relationships and agreements; however, business is business and there's often a need to fall back on a paper contract for legal reasons. Not all business agreements are the same but there are some common themes. Among these are the need to name a specific person or entity that is held responsible for the contract, the transaction date, the purpose of the transaction, what each party receives in the transaction and any other particular conditions of the business contract.

Instructions

1. Identify both your name and the customer or vendor name within the contract.

2. Explain the contract considerations. "Considerations" is a legal term for what each party in the agreement will receive in the contract. Be clear about this and use clear and measurable language.

3. Include the main terms of the contract. For example, include a description of the work performed, the price paid for the work, when the work will be completed and when the payment for the work completed will be initiated. Also discuss how long the contract will last.

4. Include optional contract terms including termination conditions, such as whether or not the contract can be assigned to someone else. Discuss how disputes will be handled, i.e., arbitration or mediation, and who will pay for the attorney's fees if the contract is breached by one party. Also include which state contract law applies if questions are raised on this issue.

5. Sign, date, and copy the final agreement with the customer or vendor. Be sure to have the customer initial each page of the contract.

References

• Entrepreneur: Contract Basics