A contract is a legally binding agreement between two or more people or businesses. Contracts are crucial to our daily lives as they ensure agreements are kept in place while reducing the likelihood of a dispute arising. Contracts underpin most decisions made in business or commercial ventures. Below, Melbourne Law Studio outlines some of the key considerations of drafting a commercial contract.
Basic Principles of Contract Drafting
A commercial contract typically includes the following:
- Details of the parties
- Services or results
- Payment details
- Intellectual property rights
- How to treat confidential information
- Who is liable
- Insurance obligations
- Any subcontracting agreements
- Exclusivity arrangements
- Procedures for settling disputes
- How contract breaches are treated
- Start and end dates for a contract and whether the contract can end early.
Contract language doesn’t need to be complicated. In fact, simplicity can reduce the likelihood of misunderstandings.
What is the Contract for?
Keep in mind the stages of contract drafting largely depends on the specific purpose of that contract. This can range from a simple commercial transaction to complex, legally binding documents that set out certain expectations.
Examples of contracts include:
- Commercial leases
- Loan and mortgage agreements
- Employment contracts
- Purchase contracts
- Distribution agreements
- Franchise agreements
- Partnership agreements
- Shareholder agreements
Contracts can be specific to the business and/or a particular activity as well as formalise a verbal agreement. Commercial contracts are usually created with the assistance of a business contract lawyer.
Drafting a Legally Enforceable Contract
Not all agreements form legally binding contracts. A valid contract requires the following elements:
- Intention to enter into a legally binding contract
- An offer is made by one person and is accepted by another
- Parties bound by the contract are specified
- Some price (money, right or benefit) is paid in return for a promise
- People making the contract have legal capacity to form a contract
Contracts can’t be enforced if they are agreements to do illegal things or breach other legal requirements
Contract Lawyer Melbourne
When you need a contract lawyer, Melbourne and Victoria based businesses can count on the team at Melbourne Law Studio. We can help draft, interpret, advise on and negotiate commercial contracts. Call us today on 03 9021 1421 or contact us online.