How to write a Contract

Contracts are legal agreements between you and your customers. When two parties agree to work together, they both expect to receive some value from the other party. A contract protects the rights of both parties by obligating them to fulfill their responsibilities. In case of any Violation against the terms of the contract, the affected side can enter a lawsuit. Before signing a contract or sending it to a client, make sure you get legal and professional advice first.

Keep in mind that strictness levels of a contract depend on how important or complicated your job is. Sometimes a simple agreement between two parties will suffice. Besides, you can break the contract into several chapters and gradually get your customer’s agreements during the job, based on the priority of contents.

Suggested terms to include in components of a contract:

  • Names and Addresses
  • Signatures (and the signatures of any witnesses) – Both parties must sign the contract to give their consent.
  • What work to do or result to achieve
  • specific job Start and End dates
  • The place in which work will be done
  • Payment Details- fixed fees vs. hourly or daily rates
  • Indicate if tax is included
  • Payment Timing Preferences- Payment by reaching milestones, achieving results, and/or on installments- Part paid in advance, the rest paid after job completion.
  • Extra Expenses- specify which party is in charge of certain extra expenses, such as travel, residence, meals, photocopying, etc.
  • Assign Intellectual Property Rights (if applicable)
  • Confidential Information Policy
  • Indemnity Clause – As risk is an important consideration in all commercial contracts, define which party is responsible for specific damages or losses during the job.
  • Professional indemnity insurance is strongly advised for a contract that contains an indemnity clause.
  • Insurance Obligations of each party

Professional indemnity covers against:

  • Professional negligence (i.e., making a mistake in fulfilling a duty for a client).
  • Loss of documents or data.
  • Unintentional breach of copyright and/or confidentiality.
  • Defamation and libel.
  • Loss of goods or money (your own or for which you are responsible).
  • Loss of or damage to property.
  • Public liability.
  • Workers’ compensation.
  • Determine responsibility for defective or incomplete work.
  • Who is responsible for fixing any defective or incomplete work?
  • The allocated time for fixing it (the ‘defects liability period’).
  • Contract Termination- A contract can include Contract Termination conditions, even if the job has not been completed.

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