Standard contracts are essential to a professional practice. They establish mutual agreement and understanding between two or more parties. According to Fair Contracts, standard contracts should include non-negotiated provisions. While some contracts tend to be fairly generic, others will cater to very specific needs. These tend to be developed by representatives within the industry. 

Standard contracts work well in low-risk situations. You'll see a lot of these in business-to-consumer interactions. These tend to be standardized transactions that remove the need for negotiations. Not every product or service needs have specific terms negotiated. An example of this may include a rental agreement. Standard variables, including rent payments and the length of the agreement, will be fairly standard. 

Types of Contracts

There are two different types of contracts.

  • Standard contracts
  • Custom contracts

Sometimes, standard contracts don't capture the specific needs of a business. This may leave room for unwanted risk. If this is the case, you may want to pursue a custom contract. A lawyer will prove critical when implementing a custom contract because they'll be aware of the latest laws and provisions. In fact, many lawyers choose to specialize in various industry sectors, allowing them to offer in-depth knowledge. 

A custom contract isn't necessarily better than a standard contract. The choice between the two depends on your situation. A standard contract is well-suited for low-risk situations where conditions are fairly generic. Meanwhile, a custom contract is well-suited to a project with unique specifications. If you're unsure, consult a lawyer before entering into a formal agreement with another party. 

Common Provisions in Contracts

Whether you're dealing with a standard contract or a custom contract, you're going to come across various provisions. Here's a sampling to help you begin the process.

  • Choice of Law - This provision outlines which state laws will be applied in a legal suit.
  • Jurisdiction - This clause determines where a legal suit will be filed.
  • Waiver - This allows the parties involved to forego their right to sue over particular provisions.
  • Severability - This allows the court to remove an invalid provision within a contract.
  • Force Majeure - Also known as "Acts of God," this clause allows a contract to be suspended in the event of a natural disaster, such as an earthquake, flood, or hurricane. 

Letter of Agreement

One of the best examples of a standard contract is a Letter of Agreement. This is considered an informal variation of a contract. In it, services may be contracted between individuals, companies, websites, co-workers, and friends. The strength of this type of contract lies in its unambiguous language and specific list of details. The weakness of this type of contract is its inability to be legally binding 100% of the time.

Non-disclosure Agreement

Another example of a standard contract is a non-disclosure agreement. Typically, freelancers will come across non-disclosure agreements before they begin a new project. These contracts preserve client interests. Whenever someone signs a non-disclosure agreement, they're guaranteeing they won't disclose proprietary or sensitive information. Some clients won't even move forward until a non-disclosure agreement is signed by all parties. This makes it critical that freelancers and employees understand what clients consider proprietary or sensitive information. 

Non-compete Agreement

The goal of a non-compete agreement is to prevent employees from stealing their employer's clients. This type of agreement asks employees to sign away their right to work with any of their employer's existing clients. Sometimes these agreements even extend to companies that offer similar services or are located in certain geographic areas. 

Freelancers are advised to fully vet any non-compete agreements they're about to sign. Giving away their right to work with similar companies could prevent them from establishing a lucrative career. Of course, one of the most important elements of a non-compete agreement is its length of time.

Statement of Work

Statements of work are very useful and, therefore, very popular. These contracts outline the major elements of a work arrangement with specificity. People prefer statements of work because they tend to avoid a lot of the legal jargon that more formal contracts are known for. Both clients and freelancers appreciate the clarity found in these types of contracts. 

If you need help with standard contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.