What is a Legal Agreement?
An agreement is a contract between two or more parties that is legally binding. It can be verbal or written. Usually, each party guarantees to do something beneficial to the other in return. In a nutshell, it is a set of promises that each party must be committed to.
Common types of legal agreement include a lease agreement, loan agreement, separation agreement, and the like.
How to Make a Legal Agreement
If a certain individual or entity makes a resolution or proposal to another individual or entity and agrees to accept the said proposal, then it would be a starting point to craft a legal agreement. Indeed, it is still a wise idea to have a written agreement for other business arrangements because if a conflict occurs, a basic handshake agreement is not always confirmed. To make sure that both parties acknowledge their rights and responsibilities, a legal agreement is a must-have.
In this short guide, we will present useful tips on how to start making one.
1. State the Name of Both Parties
In writing an agreement, you have to start by naming the parties involved. This may seem simple and obvious, but many people tend to get this part wrong. It is a must to put the correct legal names of the parties in the agreement. It will help in verifying who is/are responsible for executing the promised duties under the terms of the said agreement. For example, if a business is handled as a limited liability company, write the legal name of the company with the Inc. or LLC suffix and not by the names of the representative who will be signing the agreement for the business.
2. Determine the Terms of the Agreement
According to an article about business, the terms constitute the body of the agreement. It means that you have to clearly define the scope of your work or service you need to provide. Be detailed and concise in presenting each detail. Explain all required contract provisions. The objective is to cover all your platforms. For example, how long your rental or credit agreement will last and under what certain stipulations.
3. Set a Time Frame
Generally, agreements are signed within a particular period of time, like a year. At the end of the duration of the contract, both parties can make a choice to sign again or modify the contract as necessary under the same terms. Or, for another term, you or the other party may choose not to sign the deal.
4. Take Note on How to Handle Disputes
Disputes or disagreements might arise and it's normal, but how will you handle if it will happen is an important task. In writing a legal agreement it is best to include this part. Write what you and the other party will do in your agreement when something goes badly. Rather than having to go to court which demands a lot of time and money, you can have a resolution on how you will manage your conflict through arbitration or mediation.
5. Sign and Date the Agreement
To avoid fraudulence and perjury, do not forget that both parties must sign the agreement. It would be illegal and invalid if you miss this part. Also, put the exact date when will it happen. The signature corner must name the institution, then the name and title of the person under the signature.
6. Keep it Confidential
Frequently, once a company needs somebody else to conduct a service, the other company becomes private to delicate company data. The contract should comprise mutual responsibilities that any company data that you know and understand will be kept strictly confidential by each party.