Contracts are made when two parties agree on receiving goods or services from a person or a company in exchange for money or other goods or services. While oral contracts have existed since the beginning of time, written contracts became essential when lawsuits started sprouting like flowers in spring. You’ll be surprised how often people make agreements without something to validate their words. Every day you engage in agreements even without realizing it. For example, during lunch, you order and pay, then, the restaurant agrees to give you food. This is a great idea, but what happens when your order is incomplete? Your receipt becomes your written contract, and they have to abide by the terms. In this example, you can appreciate how the contract protects both parties. If your order is incomplete then you can ask them to fix it. By that same logic, you can’t ask for items that you did not pay for because your receipt will specify the goods you ordered and the amount paid, thus protecting the interest of the business delivering those goods.
What are the benefits of replacing agreements with detailed contracts?
- Ease disputes.
Contracts are very helpful in minimizing disputes. It is highly unlikely that people will agree in every situation. Therefore, well-written contracts often include a section to help deal with disagreements. Usually, contracts include a provision on how to deal with the most common problems in a way that both parties will benefit from. This helps minimize the likelihood that the parties will end in a courtroom.
- Fixed costs.
The body of any well-drafted contract will itemize the details and specify the goods and services you will get or provide and for what specific price. This way, there are no confusions later as to any material terms.
- Payment specifics.
In any contract; there should always be a section that stipulates a timeline for payments and identifies the amount. That way, both parties are aware of their respective deadlines. For example, when purchasing a house through owner financing, you may be asked to put a down payment on the day of closing and make additional monthly payments of “$_____” on the “1st” day of each month thereafter. These terms could be more specific if the parties want to include additional information such as bank account/autopay information, etc…
- Attention to detail.
Make sure everything you are asking for is detailed or itemized in the contract body paragraphs, especially your obligations. Attorneys are experts at making sure everything you expect is described as thorough as possible in order to avoid any misunderstandings in the long run. For example, if you’re hiring a landscaping service, and you enter into a contract where the terms do not specify tree trimming, you may be very disappointed to find out you have to pay extra every month for a service you thought was provided for so long as the contract stays valid.
- Time periods.
Contracts are very specific as to what the length of the agreement lasts for. For insurance policies can be as specific as exact hour and minute of a day. Make sure to tell your attorney how long you want your contract to last for and be as specific as possible.
Contracts are drafted for many reasons, the most important of which is to minimize risks. Attorneys are educated to pay maximum attention to detail and through experience, they modify provisions to account for uncertainties that may result in litigation. If you would like help drafting a contract or if you’ve found yourself the victim of a poorly drafted contract, call the Foley Law Firm, PLLC to set up a free 30-minute consultation.