Introduction
Contract content is a crucial part of every agreement. It should be mentioned in simple terms; however, you can include all necessary provisions in every contract. While writing a contract, you should try to make it in easy language so it’s easy to understand for the contracting parties. In this article, we discuss how to write a contract efficiently, what types of content you should try to avoid while entering into the contract, and what kinds of elements should be included to write an effective contract.
The Content of the Contract
The following elements should be included to make an easy and effective contract.
The Title of the Contract
Every contract should start with the title. The title is the first content you must mention while preparing or beginning to write a contract. Through the contract title, anyone can quickly get an idea about the primary subject matter of the contract. The title explains the contracting parties’ intent for which purpose they enter into the contract—for example, a transfer, a lease agreement, or granting something.
Introduction and aims of the contract
The introduction is much more important when writing a contract. Generally, that part contains the aims or purpose of the agreement that the contracting parties agreed to. Based on that introduction, the contract parties and anyone can easily understand the purpose and intention of the contracting parties in making it.
The Name of the Contract Parties
It is an essential part of the contract’s content to mention the contracting parties’ names specifically. The parties’ names repeatedly appear in the other parts of the agreement. In that section, you must write the names of the persons who entered and negotiated the terms and conditions of the contract. Sometimes, the party directly enters into the contract, or in some cases, the contracting party can negotiate the terms and conditions as a representative of the organization or enterprise. All these things necessarily specify the authorized person who enters the contract. In this section, you must mention the name of the contracting parties, as well as your address and proof of identification.
Specify the Definition and Interpretation of the Agreement
It is a crucial part of the contract’s content. Sometimes, a bunch of terms are used while you enter into the contract. It is a way of making it easy to understand the terms.
It would help if you defined all that interpretation while starting to write a contract. Such content will help to understand such terms are repeatedly referred to in the contract. You can also include some interpretation parts, if any, that must be covered in the contract. For example, do details of the previous contract remain in force? If contract parties enter into another agreement with third parties and a short description of the last contract, if that still exists, it will be affected by this contract or not.
The Details of the Subject Matter
The subject matter of the contract is a significant part. That should be described explicitly in detail. The subject matter is based on a contract related to a product, service, or any other thing you need to contain. Suppose your contract is an agreement granting a right to use something. In that case, you need to mention the rights given through the contract. It would be best if you also noted that the terms of your contract would operate in specific geographical areas, for example, America, Canada, etc.
Contains the other Terms and Conditions if required.
Sometimes, it is necessary to mention any substitute terms and conditions specified in the contract. For example, charges for transportation, insurance, storage and packing, marketing, etc., you should include all such things in the contract. You should also specify in the agreement which contracting party will perform that obligation per the agreement.
In the case of Delay in the Product and Services
All contract parties are directly or indirectly connected with the business as a manufacturer or service provider. But sometimes, supply delay happens due to unexpected reasons for the product or services. In that case, what remedies are available for the parties? Who bears the loss or damages? How do we calculate such damages? For example, based on weekly, monthly, or any other limitations that must be contained in the agreement. If that happens more often, which parties have the right to terminate the contract? All those things are necessarily required to be mentioned in the contract.
Price of Product or Services
The price factor is an essential part of every contract. It may be a variant part. That’s why contract parties must describe the agreement. Many variants come in the price range, for example, fixed price, sales base price, etc.; if profit arises, how will it be distributed? And if losses will come, then how will they be covered? Which type of compensation is applied when product or service sales are above the target? All those things are necessarily required to be covered.
Terms of Payment
The payment terms also need to be contained in the agreement. For example, How do you make a payment? In terms of advance or after compilation of the order of the goods or services? How do you generate an invoice for goods/services based on the primary amount or the quantities of goods/services? Etc.
Fault in the Product/Services
Sometimes, the product or services need to reach the buyer. In that case, the seller will be liable for this fault, and the buyer has the right to terminate such a contract. Please include everything in the agreement while preparing the contract’s content. You should also cover what the solution is if the product/services are not provided to the purchaser. You should also include when the contract is discharged by performance if all obligations are complete from your side.
Terms of Delay Payment
During the business process, contract parties will fail to make a payment or may not be within the above limit, which needs to be mentioned in the agreement. In that event, what type of rights has the seller acquired for the demand of due or the remaining payment from the purchaser? Or, in the event of late payment, can the purchaser be liable for penalty or interest of such payment? Is the seller entitled to terminate such a contract in all those things? All essential things you need to be included in the agreement.
Terms when Disputes Arise between the Contract Parties
Due to unexpected reasons, disputes will come out between the contract parties. The best way to avoid that panic is for the party to reach an agreement. That’s the way an agreement should be made in written terms. You should also include all kinds of events in the contract. Because the legal agreement is legally binding to the parties of the contract, and there is a base to resolve with understanding before reaching the court of law. That may save a costly and time-consuming legal process between the contract parties. The parties can quickly determine their grievance by agreeing to use mediation, documentation cancellation, or alternative settlement methods.
Exceptional Circumstances and Liabilities
It is advisable to disclose a non-liability and disclaimer clause. That clause helps the contract parties to understand that if the force of Majeure of Act of god event happens, for example, an earthquake, war, COVID-19, lockdown, etc., in that situation, what is the role of the contract parties? In that event, the parties have the right not to fulfil their part of an obligation.
Terms, Conditions, and Termination Clause
You have to specify the terms of the contract and how long the contract period will remain in force. For example, so and so date to so and so date or any specific period which the parties agree. The termination clause also needs to be included while writing a contract. In that clause, you should specify when an agreement can be terminated after the prescribed notice period. Here is one exception in the case of breach of the contract by the party.
Signature and Original Copy of the Contract
You should make an original copy of the contract for all contracting parties when it is dated and signed by them. You should provide an original copy to all parties after the date and signature are completed, which may help them resolve a dispute in any event.
Conclusion
Content is the heart of the contract. On that basis, every business runs its activities and can grow them without hesitation. That’s why you should make it very concise and detailed to help avoid disputes between the contracting parties. This is only possible when the contract’s content covers all terms and conditions easily.
