While anyone planning on entering a contract should consult with an attorney prior to contract negotiations, having a basic understanding of the main components of drafting a contract is important. As a reminder, a contract is a legally binding agreement between two or more parties. These parties can be individuals, businesses, or even institutions. The contracts themselves are enforceable in court and therefore maintaining a deep understanding of the various contents of a contract is imperative. While a lot of jargon surrounding contract drafting is daunting, the reality is that contracts do not have to be overly complicated.
The most common reason for drafting a contract is for the exchange of something that holds a significant value. Things like purchasing a home or a car necessitate a contract. From the most basic perspective, a contract must contain:
- Offer
- Acceptance of the offer
- Consideration
This means that a contract must encompass as offer, an official acceptance of that offer, and then adequate consideration, which means what each party involved will get from the contract. The contract should be written in the clearest manner possible. It is also important to note that every party involved in the contract must be legally allowed to participate. This means that the parties must be a legal adult, have the “capacity” to enter into the contract, are not impaired in any way, and no coercion is involved in the signing of the contract.
Beyond that, contracts must contain basic information like the names of the parties involved as well as other identifying information, details regarding the items exchanged in consideration, and that all is written in readable language that defines the terms used therein. For your protection, you should always consult with your attorney prior to entering into contract negotiations and before executing a contract. Please contact us if you would like to discuss the impact of entering into a contract and create or review a new contract.
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