If you need to make an agreement, just shake the guy or gal’s hand and all will be well, right?
Unfortunately, “wrong” is the correct answer. While handshake deals happen all the time, you can’t always expect them to be respected. If you need to settle a dispute, a handshake deal won’t hold up in court.
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As a result, if you want to engage in business agreements, you must prepare a contract. But you probably have no idea how to write a contract.
Here are our tips on writing a contract:
Don’t Depend on Templates or AI
One of the best things about writing a contract today is that you don’t have to always start from scratch.
There are many templates available for different types of contracts. There are also AI tools that can draft contracts for you.
However, you must never be dependent on these samples. In most cases, you can’t simply send a sample contract as is. You’ll need to modify it to suit your company’s needs.
For example, most sample contracts will not specify the jurisdiction to handle disputes. A contract isn’t valid unless it specifies the jurisdiction that protects the laws asserted.
Likewise, samples and AI tools won’t always be up to date on the latest laws. Your sample contracts might, in fact, state requirements that might be in violation of the law.
Samples are great for getting a basic idea of how to draft a contract. However, you have to expect to modify them heavily before you can send them to others.
Always Hire an Attorney
No matter how many episodes of Suits you’ve seen, you are not an expert on business law. You must always hire a business contract attorney to review your contract before sending it out.
As mentioned in the previous section, samples won’t have updated information on contract law. These samples also won’t understand varying laws by jurisdiction.
This is one of the many things that your attorney can help with. Attorneys are also expert proofreaders that can outsmart even the best AI tools. They’ll know how the slightest vague language can create issues for you in the future.
Use Plain English
There’s been a move in the legal profession to use plain English whenever possible rather than using legalese.
While there might be times when legalese is required, the contract should be simple enough for the average person to understand. Most of us haven’t brushed up on our Latin long enough to truly understand what “quid pro quo,” “bona fide,” or “a priori” mean.
A great way to test out your contract is to show it to a teenager. Ask them to explain what the contract specifies. If they can’t understand it, it’s likely you need to simplify the text.
You also don’t need to treat a contract like it’s your dissertation. Make it as concise as possible. You can use tools such as Hemingway and Grammarly to shorten your text for clarity.
As mentioned earlier, your attorney can spot potential loopholes in your contract that the other party can abuse or exploit.
For example, let’s suppose you wish to buy the rights to a novel to adapt it. You must specify what adaptations you want rights to. Do you want the right to adapt the novel to a film?
What happens if later you decide that a TV series would be better? Or maybe you want to put on a stage play based on the novel?
You must specify all the mediums of adaptation you wish to receive. You will likely also need to specify for how long you wish to have the rights. For 10 years? For 20 years? In perpetuity?
Have as much detail as possible in your contract. Make sure you include clauses where necessary.
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Specify Payment Details and Methods
If your contract states an agreement for payment, you must specify how much to pay and how to pay it.
For example, let’s say you wish to sell the rights to your novel for $1,000. What does “$” mean? Is it the US Dollar or the Australian Dollar?
What about the comma between the ‘1’ and the first ‘0’? In the United States, the comma indicates continuation. However, in Europe, a comma indicates closure.
You want to specify the currency in words. Use USD or United States Dollar rather than the $ symbol. Write out the specific amount: One Thousand in addition to the numerical amount.
Make sure you also specify how the monies should be paid. Do you want to receive the money via Zelle or PayPal? Do you want it to be sent via direct deposit? Should the payment be made in cash?
If you want to receive money via direct deposit, you must provide the bank account details within the contract. If you wish to receive money in cash, make sure you include requirements on how to confirm payment received.
Include a Section About Termination
All contracts must have a method of opting out or terminating the agreement. Your attorney will be able to advise you on the appropriate and legal methods for termination.
Offer clear instructions that allow both parties to easily terminate the contract. Make sure you offer multiple methods for termination if applicable.
Finally, make sure you have clear sections where you and the other party have to sign. Make sure you always have a section indicating the date when both parties have signed.
You might also want to include a section to specify the location where the contract was signed. To be extra cautious, include a section for any witnesses, notaries, or lawyers to sign the contract.
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Start Writing a Contract
Now you know the rules on how to go about writing a contract for your business.
You can use contract samples or AI to help you get started. However, never depend on these drafts as they are. Always hire an attorney to revise your contract.
Write your contract in plain English and use specific language. Include detailed instructions on how to make payments and terminate your contract.
With these guidelines, you’ll be ready to start firing up contracts. For even more legal advice, visit our website!
Source: Cosmo Politian