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How to Write a Business Contract

Our book How to Use Legal Forms covers the structure of typical business contracts, and covers each of the following in detail:

  • The Front of a Contract
  • Table of Contents & Index of Defined Terms
  • Body of the Contract
  • Back of the Contract

How to Use Legal Forms looks at how to write a business contract in detail. In this article we will restrict ourselves to discussing the real meat of a contract – its body.

The body of a contract is written in different ways depending on the objectives. Some of the ways the body can be used are:

  • To use language of performance to describe activities that are considered to be happening at the same time as the contract signing. For example, the transfer of property is described as happening at the time of signing a Purchase Agreement
  • To present facts, and allow the parties to make representations about facts
  • To include statements of policy which define rules that the parties agree to abide by, or that  require specific action. These are often policies that can be based on statutory requirements.
  • To prohibit parties from specific actions, such as disclosing confidential information. This is the opposite to discretion, which the body of contract can also include by giving the parties discretion to take, or not take, actions
  • To define conditions. These will either be conditions precedent, which indicate that X must happen before Y, or conditions subsequent, which indicate that if X happens then Y will stop
  • To oblige parties to meet explicit contract conditions.

The body of the contract has multiple sections, sub-sections and enumerated clauses. These will flow naturally from the subject matter, with the basic guideline to use multiple sections and sub-sections to promote readability, and to avoid long clauses with complex sentences. There a number of standard clauses you will find in most contracts, such as the Dispute Clause, which is an important part of any contract as it maps out how disputes are dealt with, and the Contract Clause, which deals with the way that the contract is modified for future use. How to Use Legal Forms covers these clauses, along with other standard terms you will find in a business contract.

When Contracts Are Disputed
The whole point of a contract is to define as much as possible at the outset and mitigate the need for legal wrangling in the future, but when breaches do occur they are protected by law. Courts can award compensatory damages, and when considering how to write a business contract these damages should be taken into account. There are a number of different damages classifications:

  • Exemplary damages are those awarded to make an example of the party that breached the contract, and thus act as deterrent to those contemplating similar infractions. These are the headline-grabbing damages that can reach into the millions of dollars
  • Nominal damages are at the other end of the scale from exemplary damages and consist of those where a quantifiable loss is not identified, but the fact that there was a breach is determined
  • Compensatory damages are those awarded to the party damaged by the breach of contract. These consist of both consequential damage and direct damage
  • Liquidated damages are those that are pre-agreed in contract clauses
  • Punitive damages are used to punish the breaching party and often relate to cases of fraud

Further Information
For further information we recommend that you purchase How to Use Legal Forms. To buy now just click here. The courts are clogged with people who entered into agreements that don’t afford them the protection they thought they did at the time. Some of the most common mistakes are people using outdated forms that don’t take account of new laws that have been passed, and the inclusion of terms that are unenforceable under the jurisdiction that governs the agreement. The book How to Use Legal Forms helps you avoid these pitfalls.

Also, don’t forget to subscribe to the email mini course, which delivers more information on legal forms direct to your mailbox. Just enter your name and email into the contact form at the top right of this page.

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