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How to draft an effective contract

Contracts are incredibly important in business, and they frequently play a key part in a company's success. When it comes to contract drafting, there are several considerations to consider, such as ensuring that contracts serve everyone's best interests and determining ways to assist avoid future contract disputes. 

It is critical for individuals to design successful business contracts, whether they are establishing contracts for builders, construction management contracts, real estate contracts, or any other contract.

In this blog, we’ll discuss the importance of drafting contracts correctly, and present some effective tips on how you can draft better contracts.

Why is it important to draft contracts?
Whether you're a small business owner or a senior executive, knowing how to design a contract is a valuable skill to have. 

Good writing should give clarity and limit the likelihood of a conflict. Poor drafting, on the other hand, might result in duties that don't operate in practice or don't represent the business arrangement, increasing the risk and potential expense of litigation. 

For more information on how to avoid this costly process, visit our blog, “How to Avoid Litigation”. 

How can I draft effective contracts?
Drafting a good contract is a multi-step process that, if done poorly, can be rather challenging. 

Here are some of the tips to create a better contract:

1. Get it down on paper 
In many cases, oral agreements are lawful and enforceable, but they are sometimes difficult to enforce in court. Even though the law does not demand it, most commercial agreements should be in writing. 

Because you have a document that clearly sets out each party's rights and duties in case of uncertainty or dispute, a written agreement is less dangerous than an oral agreement.

2. Maintain a straightforward approach 
Make short, straightforward sentences with basic, numbered paragraph titles that let the reader know what's coming next. 

To enforce a successful contract, sophisticated and long-winded wording is not required, it is advisable that contracts are kept as simple and clear as possible. 

3. Including a provision for dispute resolution 
This will specify how a contract breach will be addressed, including who will pay attorney costs, if arbitration or litigation will be utilised, and if litigation is used, what legal jurisdiction the breach will be settled in. 

4. The last page should be used for signatures and dates 
A contract is not regarded to have been put into force unless both parties sign and date it. 

Before signing the contract, all parties should grasp all of the provisions, and if any party does not understand any of them, legal guidance should be sought.

5. Ensuring that the contract complies with the law 
Whatever your contract entails, you should be confident that it was drafted within the confines of any relevant laws. 

Otherwise, the contract will be unenforceable in part or in whole. The contract might specify the jurisdiction a contract will be interpreted in. 

6. Include a contract termination clause 
The contract's length should be indicated, as well as what acts by either party might result in the contract's early termination. 

If the contract is for ongoing services, a clause may be incorporated that allows for the contract to be terminated without cause with advance notice.

7. Make a list of your payment expectations 
Specify who pays whom, when payments must be paid, and the terms under which payments must be made. This section should be very thorough. Say so, along with dates, times, and conditions, if you're going to pay in instalments or just after the service is done to your satisfaction. 

Consider providing the payment method as well. While a company check or business charge card may suffice for some, others may prefer a cashier's check or even cash.


You must keep in mind that a contract is not deemed valid unless both parties have signed and dated it. Furthermore, before signing the contract, both parties must comprehend all of the terms. Before signing a contract, if a party does not understand any element of it, they should get legal advice.

We provide a comprehensive range of legal services for all sorts of enterprises, including the creation of new contracts from scratch and the examination of existing contracts. You can reach out to us for further information on how to draft a contract at [enquiries@personafinance.co.uk]. 
2022-08-25 15:00 Legal