How to Write an Investment Contract Agreement
Investing capital in a company is a complicated process, with both sides of the investment hopefully gaining a return on the investment far greater than the value of the investment itself. Before money can change hands though, it's important to create an investment contract agreement that contains the full details of the investment from both parties. Though the agreement can't guarantee a return on investment, what it can do is serve as a protective measure. With an agreement in hand, the investor knows precisely what the company intends to use the invested funds for, while the company receiving the investment knows when and how the investor will provide the funds.
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Instructions
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Open the contract with a paragraph titled "Investment Agreement," explaining the date that the agreement begins and the names of the individuals involved in the investment transaction. List the addresses of the participants as well, using the address of the company that the investment is in as the address for the investment funds recipient if the company already has a physical locale.
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Follow the agreement section with a "Recitals" section that includes the basic agreement. List the company name making the investment, the investment amount and what the expected returns on the investment consist of -- for example, shares in the company.
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Set the agreement down in writing as a series of articles, with each covering a separately agreed upon point. Label each as "Article," followed by the article number for easy location during any later discussion, for example, "Article 1," then "Article 2." You'll want to make sure that you include in the articles the investment amount, how and when the investment is paid, any limitations on the use of the investment funds and the returns for the investment agreed upon by the participants. Be precise to avoid later misunderstandings.
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Include any performance-related goals that the company has to meet before an investment payment, if the investor intends to split the funds according to predetermined benchmarks. Include any deadlines on goals, as well as details about the goals themselves. Be as precise as possible to avoid loopholes on either side.
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Set a termination date for the investment contract that sets a final date by which the investor must supply the funds and the time span during which the company must supply the agreed upon returns. Include a section detailing under what conditions each of the participants can cancel the contract and whether there are any penalties involved in doing so.
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List the contact information for all participants. Include as much contact information as possible, as well as a specified method for making contact to which all participants agree.
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End the contract by choosing a legal venue in which to handle disputes. If the contracted parties are in differing locales, choose one that both can agree with.
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Leave space at the bottom of the contract for the notarized signatures of all participants in front of two signatory witnesses. Create two copies and check them to ensure they're duplicates before having the participants sign each. Have the contracts checked by an attorney specializing in corporate law to ensure all necessary language is present before presenting the contracts for signatures.
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