How to Write a Simple Contract

A business deal between two parties or individuals is legalized by a contract. The complexity of a contract depends upon the nature of the business. Big corporations prepare contracts which are spread over hundreds of pages, while individuals enter into an agreement with the help of a simple contract. In this article, we will take a look at the steps involved in writing a simple contract.

A contract is an oral or a written agreement which specifies the obligation of individuals/parties, involved in the contract, towards each other. A breach of obligation is unlawful and can lead to litigation. Although you can prepare a simple contract yourself, it is advisable to consult a lawyer or an attorney to get an insight into the intricacies involved in this process. Mentioned below are the steps involved in writing a contract.

Writing a Simple Contract

Write down the legal names and addresses of the parties entering into the contract.
Write the terms and conditions of the contract. This includes the ‘consideration’ that each party is obligated to. A contract is formed on the basis of the consideration that the concerned parties provide to each other.
Write down the penalties that would be applicable in case a concerned party is not able to fulfill the consideration. If a party fails to meet the consideration repeatedly or there is a deliberate breach of contract, the ‘authority’ to proceed with litigation has to be mentioned in the contract.
Specify that all the concerned parties have read the contract and given their approval to it. This is important, as in case of litigation, a party can claim that they were not aware of the terms and conditions of the contract.
Sign the contract and get other parties to sign the contract in front of an attorney.

Simple Contract – A Sample

This contract is made on the ………………………………….(date) between ………………………………….(name 1), of ………………………………….(address) and ………………………………….(name 2), of ………………………………….(address).

The parties agree to the following terms and conditions:

The agreement between the two individuals will be valid till ………………………………….(date).
………………………………….(name 1) will lease ………………………………….(name 2) a total of twenty computers in exchange of a monthly payment of $…………………………………
The computers are in a good condition and ………………………………….(name 2) is expected to return them in good condition when the lease duration is over.
Any damage to the hardware or the software of the computers will lead to a penalty which will be decided by an independent computer technician.
If ………………………………….(name 2) fails to make the necessary payment by the …………………………………. of every month, a late fee of $ …………………………………. will be levied.
If ………………………………….(name 2) fails to make the necessary payment twice in a row, it will lead to the termination of this contract, and a process to recover the computers shall commence.
………………………………….(name 2) will have …………………………………. months to pay the due amount along with the late fee.
If ………………………………….(name 2) fails to make the necessary payment even after the stipulated time, ………………………………….(name 1) will have the authority to initiate civil litigation.
………………………………….(name 2) will be sent a notice before the litigation is filed.
Both parties agree to the terms and conditions mentioned in this contract.

………………………………….(name 1) (signature)
…………………………………. (date)

………………………………….(name 2) (signature)
…………………………………. (date)

Note: Agreement and contract – both these terms have different meanings. Agreement is used for a fact or an action that is agreed upon by two parties, like an agreement between two friends to go for a walk. This kind of agreement is not legally enforceable, as there is no consideration present. A contract involves a consideration for all the concerned parties. For example, you go to a shop to buy a loaf of bread and pay the shopkeeper. For the shopkeeper, money is the consideration, and for you, it is the loaf of bread.