How to Draft a Contract for Services
Knowing how to draft a contract for services is vital when you want to exchange something of value such as services or IP for monetary or other consideration.3 min read
Knowing how to draft a contract for services is essential when you intend to exchange something of value such as labor, services, or intellectual property for monetary or other consideration.
Contracts create legal obligations between two or more contracting parties. These parties could be institutions, businesses, individuals, etc. Creating a contract for services means that you agree to perform certain services for an entity in order to receive payment from said entity. If properly written, the provisions of a contract are enforceable in court.
Therefore, it's essential that you include all pertinent information to ensure fairness and protect all parties. Common situations that require the drafting of contracts include:
- Buying and selling a car
- Purchasing a home
- Commencing employment
- Publishing creative works such as books
- Remodeling a house
- Hiring construction crews
- Offering services in exchange for financial consideration.
A general contract for services is very useful if you intend to provide services to another party or receive services from the other party. Also known as a service contract or agreement for services, the contract defines the relationship between the offeror and the offeree.
Such a contract creates a clear record of the duration of services, the price, type, time, and manner of payment as well as other contractual obligations.
Elements of a Contract
All contracts must possess three elements; an offer, acceptance of the offer and sufficient consideration (meaning what each party benefits from the contract).
Contracts should be written with minimum legalese to enable all parties fully understand its implications … without the need for an attorney. This ensures that everyone clearly understands their contractual obligations and provides adequate protection in the event of a breach of contract or nonperformance.
Contracts should only be signed by persons with sufficient authority such as the company's CEO or owner. A contract is not legally valid unless all participating parties are competent to contract. This means that they must have reached the legal contract age and are deemed to have attained sufficient mental capacity.
This usually means that contracting parties must be at least 18 years old, unless under special circumstances. If you wish to enter into a contract with a minor, the parents or guardian may be allowed to sign the contract on the minor's behalf. In some states, emancipated minors can enter into a contractual agreement if they've been granted legal adult status.
Sufficient Mental Capacity
It is essential that all contracting parties possess sufficient mental capacity to fully understand the terms of the contract. This means that persons with severe mental or intellectual disability are unable to enter into contracts since they lack the mental capacity to understand contractual obligations and legal rights.
Voiding a Contract
A contract becomes void if any of the contracting party is intoxicated or mentally impaired at the time of signing. Contracts are also void if entered under coercion or duress. For instance, when an individual holds other parties at gunpoint and forces them to sign a contract. Such a contract is not valid since the contracting parties were coerced into entering the agreement.
All valid contracts must contain a consideration. This means that something of value must be exchanged for another thing of value. This could be intellectual property, goods, cash, services, or a promise to exchange these items.
Furthermore, the contract must stipulate a fair consideration. For instance, if Susan agrees to pay Joan $40,000 for a house whose fair market value is $200,000, such consideration is unfair. However, if Susan promises to pay $190,000, the consideration will be deemed fair since the amount is closer to the real value of the item.
The terms of a contract must be clear to ensure that it is enforceable.
For instance, Jack agrees to sell his car to Joe for $2,000 on November 14, 2017. The terms are clear and as such, enforceable. However, a contract where Jack agrees to sell something (that will be determined later) to Joe, for whatever money he has next week is unclear. It is not certain what is to be sold, when the transaction will take place and the value to be given in return. Such a contract cannot be enforced even if both parties agreed to it.
If you need help with how to draft a contract for services, you can post your legal need on the UpCounsel marketplace. UpCounsel accepts only the top 5 percent of attorneys/lawyers on its site. Attorneys on UpCounsel come from prestigious law schools like Yale Law and Harvard Law and usually have 14 years of legal experience, including work on behalf of or with companies like Airbnb, Menlo Ventures, and Google.