Contracts will save parties from confusion about what is expected of them. It however requires that the contract follows best practices to ensure it covers all the bases agreed upon by the parties as well as clearly outlines terms so that everyone understands what has been agreed upon. The following guidelines must be followed when creating contracts.
Language plays a big part in contracts and it takes on different aspects. The main aspects though are:
Brevity: Don't use more words than you need to. Even though lawyers like to use colorful language, remember that being too wordy can affect the understanding of the contract. Use only words that add value to the subject.
Clarity: Avoid ambiguity, make sure there is only one way to interpret clauses in the contract.
Terminology: Different industries have unique terminology, do not coin your own terms. Use the exact terms as understood within that industry.
Although contracts may vary in terms of style, length, and details, they all follow the same basic format. Regardless of industry, transactional detail, and so on, the following contract parts need to be included.
The Frame: This includes the formal introductory statement as well as the signatures at the end.
Definitions: Certain terms may need to be defined as they are used in the contract. This section clarifies what exactly is meant when those terms are used, for example, “Parties.”
Business Section: This is the body of the contract that should spell out rights and responsibilities of the parties.
Termination: This part will address the procedure involved in ending the relationship between the parties.
Boilerplate: This is placed at the end of a contract and defines general provisions of the contract. It includes policies that govern the contract as well as supporting laws.
Contracts need to have pre-approved formatting guidelines. Certain font styles may not be appropriate for a business contract or may not be easy to read. The right font ensures clarity and professionalism. This adds to the seriousness of the content created.
One of the ways to standardize your contracts is to have templates instead of starting from scratch or copying old contracts. Contracts will save time, promote approved standards and eliminate errors. While using templates, however, follow these practices.
Make Templates Flexible: Avoid being too rigid with the templates, allow for certain changes to be made if the need arises.
Have More Than one Template: There is no one size fits all templates. Create different templates to suit particular situations that way people will stick to using templates.
Use Experienced Professionals: Template design needs to be done with the involvement of people who are knowledgeable about the industry. Lawyers can handle the legal aspect of a contract and industry professionals can handle the technical aspects such as terminology, deadlines, and pricing.
Test Templates: Involve ordinary business people or employees in the template creation, let them read through the contract, and highlight sections they do not understand.
Improve Templates: Do not sit back and believe the template created 2 years ago will serve the same purpose today, continuous analysis of contracts can help improve templates. To meet present needs and patch up loopholes.
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Creating a contract is not enough to ensure its effectiveness. How you manage it after creation plays a crucial part as well. The following practices need to be adopted as well:
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