Drafting an enforceable contract is not as difficult as it seems. Although it is nearly impossible to think of every issue that could arise, there are standard provisions that can protect you (or your business) from getting sued. A few easy steps can help minimize the potential problems with drafting a complete and enforceable contract.
Below are a few suggestions and provisions we recommend on including in your contract:
1. Put it in Writing:
I cannot stress this enough! Memorialize your agreement. There is no good reason not to do so.
If your reason not to put something in writing derives from the need to keep something confidential, then add a legally enforceable confidentiality clause which prohibits parties from disclosing information associated with said contract. Noncompete agreements in employment contracts are also helpful for limiting how and for how long an employee can conduct business in the same area after being leaving their employer.
There’s no reason not to put something in writing. If you think of a good (and legal!) reason, please email that suggestion to us!
2. Clearly Identify the Parties:
Clearly set forth all the parties to the contract. What is your part? What is the other party’s part? Who is the buyer? Who is the seller? Are the parties individuals or business entities or both? If you want the individual and business entity bound by the terms of the contract, ensure all are parties.
Identify the parties in the very beginning of the contract. Doesn’t have to something crazy either. One or two sentences would do it. As long as it’s clear.
3. Define what each party is required to do (or not do) as part of the Agreement:
This is also known as consideration. Make sure the everyone’s legal obligation is clearly set forth. This includes terms like the price, services, goods, etc. Define what the parties are obligated to do (or not do) as their part of the bargain.
4. Include all key terms:
For a contract to be enforceable, it’s necessary to set forth all key and material terms. Ask yourself: “who, what, when, where and why” so to speak. This will avoid having the agreement deemed unenforceable.
5. Clearly state the timing and performance:
Set forth all of the material terms of the agreement; such as the timeframe of the agreement; what each party is expected to do; etc. In other words, don’t leave out key terms or loosely refer to other unidentified agreements or terms outside the agreement. No guessing here!
6. Determine dispute resolution method:
If desired, set forth whether disputes should be arbitrated, mediated or resolved in court. Include language for where (venue) should be for the resolution of disputes. What State would you have to initiate an action for breach and/or enforcement of the terms of the Agreement.
I’m personally a fan of leaving this option open to the parties, with no restrictions for seeking court intervention immediately. Some people prefer to limit court action only after the parties make an attempt (in good-faith) to the resolve the issues before filing a lawsuit.
7. Prevailing Party:
Decide if you want an attorney’s fee clause entitling the prevailing party to the dispute their attorney’s fees and costs. If not in the contract, no one recovers their attorney’s fees in a dispute (unless the cause of action allows for fees by statute).
This is one of the terms I always include in contracts. It’s a great deterrent for people who are thinking of breaching a term in the contract.
The legal process can get difficult, which is why we always recommend that you seek the assistance of counsel; or at least have a consultation. Schedule a consultation with one of our attorneys today to review the issues of your case, the legal options you may have, and certain rights that pertain to your unique situation.
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