10 Top Tips for How to Write a Contract

creating legal written agreement how to write a contract

Small and mid-size businesses anticipate a 50 percent sales increase from business contracts.

Contracts are inevitable businesses and even our everyday life. From shareholder's contracts to employment agreements, an average person comes across many contract agreements in life. That is why companies are investing in contract managers as early as now. Studies have found that companies could lose up to 10% of their annual income from mishandled contracts.

If you are looking forward to writing one, you must do it well to surpass the other parties' expectations and secure great deals.

Here are 10 essential tips on how to write a contract for your business.

1. Do Your Research

The initial step for writing a business contract is to research. Find out the right information on the topic you would like to discuss.

Get statistics and other facts from the parties which will benefit from the contract. Do your research thoroughly to avoid the inconvenience of writing the wrong information.

After the research, write a draft for the work and pinpoint the crucial things you must include. Write the final copy only when you are sure you have collected the right information. 

2. Target the Right Person

Be particular about the person you are addressing. If you want to reach out to the manager, it would not be helpful to get through the juniors or other subordinates. 

If you suspect that it might get into the wrong hands, politely address them to connect you with the right person.

When you target the right person, you will save the time you would have spent negotiating with the wrong people.

3. Be Professional

Use a formal tone when creating a contract. A great formal language, combined with an excellent presentation will reveal your seriousness and expertise.

For presentation, you may use a great template according to the types of contracts. There are many types of professional templates for different contracts. Review them, and select the best for you.

After that, start the contract in a generic form. State the parties in their professional names and avoid nicknames. Write full dates, full addresses, and the correct names for websites. When writing, you may highlight, bold, or underline the vital parts you need to emphasize. 

4. Use Simple Language

A good contract should be written in a simple language. Everyone who goes through it should understand each word without struggling. This is particularly true if you are writing to small business entrepreneurs.

Avoid long sentences as they may draw away the attention of the reader. Avoid the hard vocabulary too, and be straight to the point.

You can also split the wrong paragraph into smaller ones. After that, you can create short headlines for each small paragraph. The segmentation will make the work easy to read and understand, irrespective of the education level.

5. Avoid Mistakes

Writing mistakes can be a turn-off when writing a contract. The other party might judge you for them, or turn down the contract offer. The mistakes can also cause other adverse results to the parties, or even cause massive losses for your business.

The seemingly insignificant punctuation mistakes include commas, full stops, pronouns, verbs, and so on.

You can minimize the mistakes by proofreading the work at least three times after writing, or you could start using AI contract review software. You can also reduce them by presenting the work in front of another person. Observe conciseness too to avoid the glaring grammatical mistakes on the contract.

6. Be Consistent and Define Terms

Some words only fit well in their complex form. Others, mainly the legal terms, do not have English forms. If you use them, make sure that you define them at the end of your contract.

The definitions segment should simplify any complex words that you may have used in the context. For consistency, don't include contrasting terms in the contract.

7. Specify the Payment

Payment is mandatory for all business contracts. You should, therefore, outline the terms and the condition for the payments. You should also maintain accuracy when writing the money figures.

If possible, indicate to whom the payment will be made, and via which channel. Write the method of payments too. Many businesses consider cheque as the best payment method, although some may accept cash.

Seek clarification on the best method if you aren't sure. By so doing, you will reduce future inconveniences, and showcase your keenness to details.

8. Consider Arbitration or Mediation Clause

There is no guarantee that the deal will always be smooth. At times, you will disagree and face other challenges. These hardships can cause adverse effects on the business.

An arbitration or mediation clause can help you solve business disputes. The clause mentions a third party who will be intervening to bring peace when things go south.

Therefore, the clause should highlight cases that will need a mediator and what will happen after the judgment. The mediator could be a legal expert or any other professional who could be of help.

9. Define the Terms of Termination

A business contract is not bound to stay forever. It should have an expiry date, after which you might decide to renew or end it. When writing, highlight the terms and conditions for the termination. Ensure that everyone is at peace with the termination procedures. 

You can either dissolve the contract in court or informally by following the measures you indicate.

When you define the rules, you will avoid the endless trips to court as you solve the disputes.

10. Understand the Basic Principles of Contract Law

There are various rules and regulations for writing contracts. These laws may vary from state to state, although they have many similarities.

Law students learn these laws in college, but you can still get the basics through an expert. You can also get some knowledge online.

The main concepts for contracts are offers, consideration, and acceptance. Do not hesitate to ask your supervisor about others.

Secure Deals by Learning How to Write a Contract

Hopefully, you now know the basics of how to write a contract. The format may vary depending on the template and niche, but the idea is the same. Understand what you are writing for, plan well, and follow the above tips on contract writing.

Contract Conclusion

Keep up with our blog for helpful contract writing, legal, and business tips. We touch multiple entrepreneurship aspects, including business consulting, crypto, real estate, startups, and much more. We also post the latest legal news regarding the global business world. Stay in touch for more law-related informational articles beyond how to write a contract.

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