What is Contract Drafting?
The drafting of a contract can be defined as writing all the terms and details of the contract and agreement, so that people entering into the contract can fully understand the terms of the agreement. A contract can be drafted by anyone there is no obligation for drafting the contract, although for a secure and reliable contract it should be drafted by a lawyer.
There are numerous benefits of entering of a contract which can be enumerated as below:-
i. A Contract clearly states all the terms:-
It enumerates all the responsibilities and duties for the each party involved. A contract contains a number of elements, therefore without a written agreement, it will be difficult for the people to remember each and everything about the contract. The overall process of preparing as well as drafting of a written contract also leads to a well-planned agreement. The contract also serves as a checklist to evaluate all the basic requirements on your to-do list.
ii. A Contract is legally enforceable:-
The agreements between the parties are legally binding. However, the written contract always enhances the enforcement opportunities. Without the written terms, a legal dispute is not enforceable by eye. Real estate transactions and debt payment agreements are among the contracts that is needed must be written.
iii. Prevents misunderstandings and Disputes:-
The terms and conditions specified in the agreement between the parties presents the clarity of the facts in the minds of the party to the contract, therefore it prevents the conflicts and misunderstanding between the parties.
iv. It reduces the risk of dispute relating to payments and the work performed under the contract:-
The parties are binding to performance of the contract if there is a breach of contract between them it will be settled as per the terms of the agreement between them, therefore due to the contractual relation the rights of both the parties are protected.
v. A valid Contract gives you peace of mind and security for the work being done by you.
vi. The Contractual relation between parties serves as a record for what was agreed between them.
There are many contracts which are generally used in normal course of business being :-
i. General business contracts
a. Equipment lease:
These contracts are relates to the lease for a building or piece of equipment, including monthly payment, maintenance agreements and other related items as per their terms.
b. Partnership agreement.
Apartnership agreement can be defined as a relationship between partner, as well as their individual contributions to the business.
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ii. Employment contracts
The employment contracts are the terms and conditions which has every aspect of employment relationships which can help in providing legal protection to the business. Some of the contracts are:
a. Non-compete agreement:-
A noncompete agreement is a period of time where in an employee is prohibited from competing with your business after the person leaves your company.
b. Normal employment contract:-
An employment contract is the relationship between you and your employee in which all the information as duration, compensation, benefits, grounds for termination, and etc. that relate to your business are being enumerated.
iii. Other Contracts
The other contracts relates to all the property, goods, and services are purchased and sold, and lay out the legal framework for transferring titles
a. Purchase order: -
A purchase order is a agreement that orders a business owner to purchase an item or quantity of items at an agreed price point and also states the delivery date and payment terms.
A security agreement pledges either an asset or piece of property as a collateral to secure a loan. Whereas in the event of a default, the asset is forfeited.
Essential Elements of a Valid Contract:-
1. Offer and Acceptance-
In order to create a valid contract, there must be a lawful Offer by one party and Lawful Acceptance between the parties to a contract.
2. Intention to create legal relationship-
There must be an intention of both the parties to enter into a legal relationship. Whereas the agreement of the social or domestic nature will not contemplate a legal relationship.
3. Lawful Consideration-
Consideration is the price for which the promise of the another is bought. The consideration may be in cash and kind whereas may be in present, past or future and it should not be unlawful, immoral and against the public policy.
4. Competent Parties-
The parties to the agreement must be competent. If the any of the party does not have the ability to enter into the contract, then the contract is Invalid.
5. Free Consent-
The ‘Consent’ means the party must have been agreed upon the similar thing in the same sense. According to section 14, Consent is considered to be free when it is not caused by-
ii. Undue Influence
6. Lawful Object-
The object of an agreement must be valid. It must the purpose or design of the contract. The object is said to be unlawful if-
i. Its forbidden by law
ii. Its fraudulent
iii. It leads to injury to the person or property
iv. It’s immoral or against the public policy.
7. Not declared to be void or illegal-
The agreement satisfying all the terms and conditions of the valid contract must not be declared void by any law in force in the country.
8. Legal Formalities-
An oral contract is a considered to be a valid contract, except in those cases where writing and registration is required in some of the cases.All the elements mentioned above must be in order to make a valid contract.
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