A business contract is a vital aspect of the relationships that organizations have with different entities. A contract specifies details of an agreement, the products or services and deadlines or timelines that are linked to a business partnership. Contracts help to prevent disagreements and disputes as well as providing the remedies when parties breach them. Being aware of how to draft a contract can protect your business.

Basic Considerations

General considerations when writing a contract include determining whether the parties involved can participate legally. A contract may be considered invalid if people do not understand what they are agreeing to or signing. Certain requirements should be met to facilitate the understanding of everyone involved.

All the parties should be adults unless you are dealing with an exceptional case that allows minors to sign a binding contract. Parents and guardians can also sign contracts on their children’s behalf.

All parties should be mentally sound with the capacity to understand what the contract entails. A contract can be voided if one of the parties was mentally impaired or intoxicated when a contract was being signed. When all parties are sober, they have the ability to decide whether they will proceed with the contract.

Legal Purpose

A contract exists when things of significant value are being exchanged. Contracts usually involve exchanging services or products for money. It is important to clearly establish what the legal purpose of an agreement is. The purpose should be legal because illegal exchanges are not catered for in valid contracts. Find a Business Lawyer here.


Legal and binding contracts require a clear offer that has been accepted. Before you create a contract, the parties should be aware of what will be stipulated in the contract. If a contract is not favorable to the needs of all the parties involved, alterations will need to be made.

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Basic contracts are usually available before parties agree in the final terms. After making an offer, the other party agrees to the terms. If there are alternate or additional terms in a favorable response, this is regarded as counteroffer.

The basis of contracts is that there is an understanding between the two sides to fulfill all the requirements. Without this understanding, a contract may be breached.

Written contracts are generally a preferable option to verbal contracts because they clarify terms, prevent confusion and help everyone understand their terms.

Applicable Laws

Research applicable laws that pertain to your contract to make sure that is in accordance with them. This is necessary for making sure that the contract can be legally enforced. Different places have their regulations regarding the interpretation of contracts.

Consult a Lawyer

Hire a qualified lawyer to go through your contract. Lawyers help to make sure that you write contract according to applicable laws. They can also assist with termination clauses and recommend suitable cover to recover losses in case of a breach.

It is normal for parties to negotiate terms and make changes in the contract until everyone is satisfied. Read the entire contract before you sign it to make sure there are no additional changes that you are not aware of. Keep copies of all contracts that you sign.