Contract Drafting Sample: Everything You Need to Know
A contract drafting sample is a template for preparing a contract which is used by business owners, paralegals, and attorneys when creating an agreement. 3 min read
2. What Are the Key Elements to Keep in Mind Before Drafting a Contract?
3. Description of the Parties
4. Description of the Consideration
5. What Must You Do If the Contract You Are Drafting Is Covered by The Uniform Commercial Code (UCC)?
A contract drafting sample is a template for preparing a contract. It can be used by business owners, paralegals, and attorneys when creating an agreement for any entity or relationship.
Common Business Contracts
These are contracts where a party buys items from another party. They include the following:
- Purchase Orders.
- Bills of Sale.
- Agreements for the Sale of Goods.
- Limited Warranties.
- Security Agreements.
These are contracts signed between an employer and employee to set work conditions as well as employer and employee expectations. Examples of employment-related agreements are:
- Employment Agreements.
- Employee Non-Compete Agreements.
- Independent Contractor Agreements.
- Consulting Agreements Distributor Agreements.
- Sales Representative Agreements.
- Confidentiality Agreements.
- Reciprocal Nondisclosure Agreements.
- Employment Separation Agreements.
Leases are contracts signed between two parties over the use of one party's property by another party. It is mostly used in the real estate market, but parties can also lease equipment. Common examples include Real Estate Property Leases and Equipment Leases.
General Business Contracts
These are contracts signed for a variety of business dealings to guide the conduct of the contracting parties. Common contracts signed by businesses include:
- Assignment of Contracts.
- Advertising Agency Agreements.
- Indemnity Agreements.
- Franchise Agreements.
- Covenants Not to Sue.
- Settlement Agreements.
- Agreements to Sell a Business.
- Stock Purchase Agreements.
- Partnership Agreements.
- Joint Venture Agreements.
- Drafting Contracts.
What Are the Key Elements to Keep in Mind Before Drafting a Contract?
When attempting to draft a contract, it's important to consider three vital elements:
- Have a clear understanding of the client's intentions.
- Draw up a checklist of clauses of conditions that should be in the document.
- Use existing documents relevant to the subject matter to draft the contract.
- Before drafting the contract, ensure that you fully understand the type of relationship the agreement wishes to create between the parties as well as the jargon used in that particular industry.
- Each industry uses specific language and legal obligations. Always reference texts and works related to that subject area to understand the legal requirements used in that field.
- You also need to ask the client and attorney whether there are existing contracts which they would like to use as a template for the new agreement.
Description of the Parties
Description of Parties
Typically, this represents the first clause of every contract.
Description is a term that refers to each party's legal name and alias, their type of business, and the method of referring to each of the parties in subsequent sections of the contract.
What Is a Sample of Description of Parties Clause?
Here is a sample clause: This agreement made this 25th day of May 2014, between Chilly LLC, a Wyoming LLC (hereinafter referred to as "LLC") and Ben Darby, an individual resident in the state of Arizona (hereinafter referred to as "Individual").
Description of the Consideration
Mutuality of Consideration
Mutuality of consideration or mutuality of obligation is the exchange of value over which the agreement was created. It's the most important concept in contract law.
How Must the Consideration Being Given by Each Side Be Described?
The consideration each party gives has to be described in specific terms with regards to the price, quality, quantity, and time of performance.
Additionally, any conditions which the parties intend to stipulate on their obligations must be stated clearly and specifically.
What Information Must Consideration Clauses Contain?
Consideration clauses need to have the following components:
- A full description of the considerations prepared specifically for the contract's fundamental issues.
- For money matters, state the exact contract value in dollars.
- For real estate, use the legal description as written on the deed.
- For services, describe the type of services to be offered.
- For personality, provide a detailed description of the items.
- Use plain language
- Describe each party's mutuality of consideration.
- State the conditions of the performance, e.g., contingency, payment, and others.
- State any condition applicable to the performance like penalties for late payment.
What Must You Do If the Contract You Are Drafting Is Covered by The Uniform Commercial Code (UCC)?
If you are drafting a contract covered by the Uniform Commercial Code (UCC), find out if the agreement requires a filing, or whether the agreement needs a specific form.
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