There are hundreds of different types of business contracts from the right of first refusal to the sale of intellectual property. A valid and legally binding business contract need not be written in complicated legal jargon. In fact, clear, simple English is the best way to write a contract to make sure it is easy to understand for all parties involved.
How to make a business contract easy to understand?
• Plain language should be used and not legalese. It is important that the contract be understandable to an average person if it is ever taken to court.
• The language should be explicit and concise. What is being sold and what is being paid should be stated clearly.
• The goods or services being sold should be described. If property is being sold, a legal description of the property should be mentioned.
• Identifying details such as make, model, color, size and delivery date should be stated.
• For services, what the services are, who will perform them, how long it will take and how much will be paid should be stated.
A fair business contract protects all parties involved. This includes the people who are buying services, property or goods and those who are selling. All parties must adhere to the conditions of the contract or face legal action.
The following conditions must be met for the contract to be legal:
• All of the parties involved in a contract must be legally able to participate. The contract will not be valid if one of the parties is under 18 years of age or doesn’t have the legal right to enter into a contract. There may be different laws in different states.
• All of the parties involved in a contract must have the mental capacity to understand the terms of the contract and what the contract requires them to do. Even if a person is an adult by age, they may not be able to understand.
• The contract will not be legally binding if any of the parties were intoxicated or mentally compromised by drugs at the time of signing the contract.
A legal contract is recommended when two or more parties want to exchange items of value. This can be money, goods or a promise of service such as repairing a roof or maintaining a garden. If the contract contains private business information or trade secrets, a confidentiality clause can be added that binds the other party from disclosing any of the business information.
The seller and buyer must agree with the terms of the contract in order for it to be legally binding. For this, it is recommended that both parties discuss and agree on the terms before the contract is written. This will save a lot of time, because writing and presenting a contract that one party doesn’t agree with will require a discussion in any case and the contract to be rewritten.
By Andre Bradley