Write a Simple Contract

To be able to write a business contract is certainly a very uncommon skill, possessed by a talented few. On the other hand, the systematic steps can also help you to write a simple contract. The following article describes some of the essentials to write a simple contract and is also a column to query ‘how to write a contract’.

Let us begin by understanding the meaning of contract. The concept of contract originated as a result of the agreements and arrangements, that took place between two or more parties. For example, the agreement to exchange a cow for 10 kgs of sugar is an agreement for a barter exchange. As agreements grew in numbers and the members of the society began to demand, legal enforcement for these agreements, to avoid breach and dishonor of the agreed terms and conditions. Thus many states passed laws, that insisted the legal binding of some kinds of agreements, and thus evolved the term ‘contract’.

Initially, when the nations in Europe passed and enforced independent acts and laws regarding contracts, there was a significant confusion regarding the legality or validity of these agreements and contracts. This might sound confusing, so here’s a simple explanation.

First of all, the two terms, agreements and contracts, have different meanings. Agreement is a term that is used for any fact or action that is agreed upon by two parties, like an agreement between two friends to go for a walk. This kind of agreement is not a legally enforceable agreement, as there is no ‘consideration’ present. So what is ‘consideration’? It is simply defined as anything of value, which may be in the form of money, kind or morale, that is paid for the execution of a contract. Let me give you a simple example. You go to a shop to buy a loaf of bread and pay the shopkeeper some money. From the shopkeeper’s point of view, the money is a consideration for the loaf of bread and the transaction is a legally enforceable agreement and is a contract. It is a contract from your side as well, but in your case, it is the loaf that is the consideration for your money. One must note that every contract is not necessarily written down on the paper, but those that are, have different ways to write a contract agreement.

The difference between a mutual agreement and a legally enforceable agreement was disputed in a case, Balfour vs Balfour. In this case law, a husband who worked overseas, sent his wife a periodic allowance. When the husband discovered that his wife was unfaithful to him, he stopped the allowance and the wife took the issue to the courts. It was held that as the agreement was a domestic one, there was no ‘consideration’ and hence it was not a contract that was legally enforceable.

How to Write a Contract?

The following are some of the steps that you can use to write a simple contract or to write a business contract that is simple in nature.

Write a Simple Contract – Existence of Parties The people or organizations who are party to the contract should be more than one. A contract where there is only one party is invalid. The negotiations regarding consideration, execution and penalization need to be discussed and agreed upon. Many a times, good negotiation skills

are required to negotiate the best possible deals.

Write a Simple Contract – Phrasing the contract

The phrasing of the contract is the most important aspect, when you write a contract. The phrasing is supposed to be the most important part of writing the contract, as the contents of the written matter should convey the following:

• Names and identities of the parties
• Time period within which the contract is to be executed
• Consideration that is to be paid
• Penalty, if any, for the dishonor or breach of contract
• Signatures and seals of the people who are party to the contract

Write a Simple Contract – Authentication and legal enforcement

Many a times, a simple piece of paper is considered to be an invalid contract by some of the courts. Hence the written contract is to be enforced by registering it with legally appointed people (legally appointed people differ from nation to nation or even jurisdiction to jurisdiction). Sometimes the contract also gets authenticated, if a particular stamp is affixed on the document. One must also note that the signatures and seals of the people who are party to the contract, are to be put down on the document. In some cases, the signature and seals of the witness or witnesses are also required.

Before you actually write a simple contract, I would recommended that you have a look at the contract act, that has been passed in your state or nation. One of the section will clearly state the procedure and requirements that are needed, especially when you write a business contract.