What is a Contract?
A contract is a formal document that details the mutual understanding of two or more parties over the exchange of goods and/or services. It is a legally enforceable document. And, failure to comply with any of the terms and conditions set forth in the contract may warrant the discontinuation, removal, and/or invalidity of the legal agreement.
How to Write a Contract
The guidelines set forth below are meant for anyone who wants to create loophole-free and worthwhile documents that facilitate better contract management practices. Whatever type of product or service contract you are making, follow the tips below and you will surely create a more efficient and reliable contract process.
1. Negotiate the Contract Terms
An expertly written contract starts with the right terms and conditions. Talk to or have a meeting with a potential client, partner, or employee first in order to lay out the groundwork of your business agreement.
Discuss all aspects of the business transaction, the benefits, associated costs, and expected results before committing to any written contract.
2. Use Clear and Specific Verbiage
Once the terms of the legal or contract agreement have been mutually decided, make sure that the document uses clear and specific verbiage. Doing this will help you avoid misinterpretations and potential lawsuits in the future.
3. Consult an Attorney
If it’s your first time crafting employment, business, payment, real estate, sales, service, or construction contracts, consult an attorney who can first review the agreement terms. With a lawyer-approved contract, your own and your business’ interests are taken into consideration first.
4. Follow a Standard Format
For a more efficient contract-making process, it pays to follow a standard format for your contracts. The internet (and our website) is filled with printable templates that you can customize to match the specific terms, parties, conditions, and clauses you want to include in your own agreement.
5. Use a Contract Management Software
Studies by the International Association for Contract and Commercial Management shows that businesses can gain as much as a 9% increase in yearly revenue just by following good contract management practices. This includes the use of pre-made contract templates and the creation of a streamlined contract-making process. With these software tools, you may create whatever type of contract you need from IT contracts to rent contracts.
6. Add Confidentiality or other Relevant Privacy Clauses
Another important step in the creation of a contract is the addition of relevant privacy and confidentiality clauses. Adding these clauses protects you and your clients from any undesirable actions that will affect the achievement of the terms of the business contract.
7. Set a Short Contract Creation and Approval Time
In a survey conducted by SpringCM, a cloud-based contract management company, 46.2% of the respondents reported a long (talk about months) turnaround time for the creation, approval, and enforcement of a company contract. This, in turn, may cause contracts to lose their value.
If you are a sales-oriented business, this sales contract value loss may manifest in issues with pricing, contract scope, project timeline delays, subcontractor service failures, or budget overruns. Avoid all these by simply making sure that you set a short turn-around time between the creation and approval of any contract you create.