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Basic steps for drafting your own contract.

Because I recently gave a talk on contracts, I thought it appropriate to write an article summarizing some of the points discussed. By no means is this article comprehensive enough to ensure that you can draft a solid contract, but is just meant to be a quick checklist to get you started, upon which you can expand or modify to fit your particular needs.

Basics items to include in a contract:

  • Clearly identify the parties to the contract. If one party is an entity, identify who the signor is and ensure he/she has the authority to bind the entity to the contract.
  • Indicate the effective date of the contract, since the date can be ambiguous if the contract contains a different date or dates than the date that the parties sign the contract.
  • Identify the intent of the parties and what each party is obligated to perform under the contract. Do not worry about using fancy legal terms (i.e. “legalese”) if either party may not understand the meaning. You want the contract to be as clear and unambiguous as possible as to all meanings and intents.

Additional items to fill out a contract:

  • Specific terms and conditions concerning each party’s obligations. For example, the time and method of performance, and any contingencies that could affect performance.
  • Penalties and/or remedies that would apply if one party breaches the contract, such as late fees, interest, or liquidated damages. If you want to keep the possible outcome of a breach within your control rather than risking a court fixing a different remedy, then provide for such in your contract.
  • Intellectual property rights, in the event either party is providing some kind of service to the other that can be claimed. For example, if a web design company is designing your website, the contract should dictate who owns the rights to the website design afterwards.
  • Choice of law clause to dictate which state’s laws will govern in the event of a dispute where different jurisdictions could apply. For example, if you sell a product to a client in New York from Nevada, then you can make the choice of law unambiguous by stating in your contract that Nevada law will govern the contract and any disputes arising thereunder.
  • Choice of venue clause to dictate where the parties will have to resolve a dispute, whether by mediation, arbitration, or court. So in the above example, you could specify that any dispute must be resolved in Clark County, Nevada.
  • Addressing the prospect of attorney’s fees. Nevada courts generally only award attorney’s fees if the contract provides for reasonable attorney’s fees to the prevailing party.

Remember, the above-listed items may not be applicable or optimal for your contract. You should research into your objectives and desires, along with the other party’s, to decide how to craft your own contract and what provisions to include. Or, of course, you can take the safe route and hire an attorney to do so.