Doing business is not just about shaking hands on a deal and then celebrating. You might have an agreement now, but over time, people forget what they agreed to or change their mind and try to back out of the deal.
Things will go smoothly for you with a contract that spells out the terms and conditions of your agreement and clearly lays out the expectations for both sides, including specific details about timeframes, payments, materials and procedures for sorting out any disagreements. This way, both parties are on the same page, or at least have something to take to court if something goes wrong.
As anyone who has tried to write a valid contract will tell you, it isn’t easy. There are so many things that need to be included to make your contract binding. Here are some things to consider.
Read Through the Contract Carefully
Whether it is your contract that you wrote yourself, you are using a template or you have been given the contract to sign, make sure to read it first.
Check that all the information is what you have agreed to, Check that all names and details are correct and have been spelled correctly. Check any ambiguous language that may create confusion later. Check the fine print and make sure you understand the meaning of any terms that you aren’t sure of.
After the contract is signed, it is legally binding and you may find yourself stuck with something you didn’t want or facing a breach-of-contract. Some contracts have an indemnity clause, or other ways to assign responsibility for errors, check how it could apply to you and what you might be liable.
Essential Elements of a Contract
According to the University of New Mexico, all contracts need to include at least four things:
- Something needs to be offered (the “offer”)
- Something needs to be exchanged for it, usually money, otherwise it is a gift or a promise rather than a contract. (a “consideration”)
- Both sides need to accept the terms of the contract (the “acceptance”)
- Both sides need to agree to the conditions and understand that they have entered into a contract (“mutuality”)
Research Local Regulations
Even with a template, get advice about local regulations that might apply to your situation. There may also be union or industry association requirements that need to be included. Are there insurances or noise restrictions that apply? Perhaps there are fees or planning permissions that have to be in place before work can start.
Define Specific Details
Leave nothing to chance. Spell out in your contract all the information that is relevant to your agreement. What is obvious to you may not be so obvious to someone else. Define key terms and the exact products and services you will be providing. A term like “due in 30 days” might mean calendar days or business days, if you assume business days but the other party assumes calendar days you may find yourself arguing over a late fee.
Make sure to cover:
- All of the information for both parties
- The start and end times of the contract
- Any key terms used
- The products or service that you will be receiving or providing
- Payment terms, due dates and any milestone payments or part payments that may be needed
- Any fees or interest for late payments
- Any insurances or liability requirements
- Dispute resolution process or breach-of-contract process
- Any special conditions
Signing the Contract
Make sure to look for all the places you need to fill in, and cross out any blank spaces to prevent them from being filled in later with something you didn’t agree to. Make sure to keep a copy of the contract — if you can, have two original copies that you both sign. At least ask for a photocopy and check that it is accurate. This way, you both have a signed record of what was agreed to in case it is needed later. Keep it somewhere safe for future reference and hold on to it for longer than you think you might need to in case there is a dispute in the future over what happened.
Do You Really Need a Written Contract?
While some verbal agreements can be enforced in court, a written contract shows what both parties had agreed to. If you are going to go without a contract, you will need to keep as much evidence as possible about what you both had agreed to and what actually happened. Keep your emails, any quotes or invoices, notes from discussions, logs of phone calls, and copies of any documents to help prove your case. With all that work, you will be better off getting it all down in writing to begin with. Using a contract will give you peace of mind that what you agreed to will actually happen.
You need a written contract when:
- Your work or the product you are receiving needs to be of a specific quality, size or material.
- You aren’t sure the client will pay you after you have done the job.
- You have to purchase insurance or materials, or hire staff to complete the job before getting paid.
- You are working to a timeline where milestone payments are made at certain points, or there are bonuses for early completion.
- You or your client has to keep certain information confidential, such as a non-disclosure agreement, business information or personal information.
- You are required to have a contract by your insurance company.
- You have a legal obligation to have a written contract (check your local laws and trade associations).
- You want to prevent misunderstandings between you and your client by making things clear from the start.
- You want proof in writing for the court to enforce, or to at least consider, if there is a dispute.
Here you will find 32 contract templates. These contract templates are ready for you just fill in your details and go, or you can edit them to suit your situation.
Service Providers and Vendors
These templates are for service providers offering their services for a limited time or a single event. There are fields for the start and stop times, the scope of the project, and payment terms. Customize the details to what the client is paying you for and get them signed.
Construction and Renovation
This category of contract templates is for contractors who will be providing a service over a period of time that includes materials. The contracts allow for defining the scope of the job, and for the dimensions and quantities of materials purchased or supplied by the contractor. It is easy to add in the details specific to the project agreed to with the client.
Ongoing Maintenance Contracts
Templates in this category are for contractors who offer ongoing services; this sets the contractor apart from regular employees. These contract samples outline the tasks that are included and how frequently they will be performed.
Education and Academia
This category of contract templates are for educators in a school or academic environment to use with students, and they have spaces for the parent or guardian to sign where the contract is between the school and a minor.
Finance and Business
Contracts in this category are for people looking to make a financial investments or business deals. They have all the standard terms and conditions as well as additional guidelines for fees and charges, late payments, and dispute resolutions.
These contracts are for employers wanting to hire employees. These contracts spell out the parties involved, and terms and conditions of employment or in the case of the Non Compete Contract, what will occur after the employment ceases.
Contract templates in this category are for people wanting to employ an agent to sell their house, or want to rent their house out, or who want to share a tenancy with other renters.