How To Create A Legal Agreement in Word
When minds meet, and a mutual understanding develops between two or more persons about their reciprocal rights and duties. It is generally known as an agreement. However, keep in mind that any arrangement isn’t always synonymous with a deal. Instead, a contract is just one of the forms of a legal agreement along with wills and licenses.
By definition, a legal agreement is a written document that identifies the parties’ roles and responsibilities under an arrangement. The record becomes legally binding once affixed with a signature either in manual, digital, or electronic forms. Therefore, it means that the agreement is enforceable, and the parties involved are expected to fulfill their obligations or else penalized. To ensure the validity of your document, here are some of the fundamentals that you need to satisfy in creating that legally binding written agreement.
1. A Proposal
The formation of a contract usually starts with an offer such as a service, funding, or business venture. Generally, one party proposes to another to enter a legal agreement with defined terms. The intent of the offer must be genuine and easily understood by all parties involved. Proposals can be done to individuals and even to the world at large, which indicates that the scope can vary widely. Partnership contracts, equipment leases, purchase orders, and property ownership transfers are just a few examples of business agreements.
2. An Act of Acceptance
The most common form of acknowledgment and acceptance is through a signature. By signing the document, it signifies that the person has read, understood, and accepted the terms. In this modern age, parties are now slowly moving away from printing out and physically signing contracts. Instead, electronic signatures are now commonly recognized.
3. A Commitment Exchange
The parties involved must commit to each other, something in return for what they gain out of the contract. Pledges made have to be specific, and the language of the agreement should not suggest discretion. Clarity of statements are achieved using definitive language to eliminate uncertainties, especially in investment agreements, leases, loans, and other asset matters.
4. The Intent To Form Legal Relations
In a commercial agreement context, forming legal relations is of minimal concern since individuals are generally intended to be legally bound and protected when making agreements. To check whether your written agreement has legitimate intent, examine what is at stake if a party fails to comply. It is more likely that parties with the intent to be legally protected have a more significant loss at hand.
5. The Capacity to Consent
For contracts to be enforceable, the parties need to have the capacity to consent to the legal requirements and obligations they are undertaking. Minors and mentally ill people are considered to lack the ability to contract. In the United States, about 46.4% of adults will experience a mental illness during their lifetime. Examining whether the party understood the meaning and effect of the words comprising the agreement is the standard of mental capacity.