You can make a legal contract without a lawyer at home. First, understand what a contract means: it creates legal obligations between two or multiple parties concerned in the contract—it could be individuals, institutions, or businesses.
A contract is “an agreement between parties, creating mutual obligations that are enforceable by law” (see Cornell Law School definition). The basic elements required for an agreement to become a legally enforceable contract include:
- mutual assent, expressed by a valid offer and acceptance;
- adequate consideration;
- capacity; and
Your contract must contain the appropriate information to ensure fairness, as well as protect the parties involved.
How to make a legal contract without a lawyer
Legally, a contract must have a lawful purpose, mutual agreement, consideration, competent parties, and genuine assent for it to be enforceable. That said, follow this guide to make your contract yourself:
1. Know the fundamentals
It helps to understand the fundamentals of a contract. Do you really need a contract? You would need a contract if you exchange something valuable with someone, for instance, labor or services, intellectual property, or material goods—it could even be a legal separation from a partner.
However, no enforceable contract is created if someone promises to join you for dinner on Monday because no valued consideration was exchanged. Nothing more than your good company over a meal was offered, so the promise was gratuitous.
Other situations that require contracts are home purchase and selling, buying a car, home remodeling, publishing your creative work, or offering your services for a specific time.
Contracts typically have 3 essential elements:
- an offer
- the offer acceptance, and
- sufficient consideration or what each party gets from the contract
You have to write the contract with a clear understanding of the involved parties—clear enough that they do not need an attorney for interpretation. This way, all parties involved will fully understand their obligations. The contract should also be able to protect the people involved in the event of a breach or a default.
2. All parties should be legally legible
You only make a contract with a person who can legally carry out the contract, such as the CEO of a company. Moreover, only an adult can be involved in a contract. A child under the age of 18 is a minor and can only sign a contract with essential items or goods such as food, medicines, and medical services—(data from the publication Contracts Signed by Minors Are Not Legally Binding). If you believe that your case might be an exception, check your state laws.
A minor can only enter into a contract with the help of their guardian who may do so on their behalf (in some circumstances).
The parties involved must be mentally able to understand the contract. Thus, an adult with severe intellectual disabilities cannot enter into a legal contract since they may not understand their legal rights and obligations.
Moreover, if either party is intoxicated, the chance is that the contract could be void in some cases.
Contracts entered under duress or coercion is valid and will not stand. For example, making a contract at gunpoint to force a person to verbally agree to give money.
3. Your contract needs ‘consideration’
Richard Stim (via Nolo) explains that for any agreement to be considered legally binding, it must include consideration on the part of every person or company that enters the contract. It’s simply a plan to exchange something of value. That means there must be something valuable to use in exchange for another thing of value. This benefit is known as “consideration”.
The consideration can be goods, services, cash, intellectual property, or even a promise to exchange for any of these items.
That said, make sure to create the contract using terms understandable by the other party for it to be enforceable. For instance, a contract term that reads “John agrees to sell his vehicle to Doe for $10,000 on June 7, 2022” is clear and shows who is making the promise, the consideration, as well as the time. Moreover, both parties have agreed that the exchange is a fair one.
If the terms are not clear, even if the parties involved understand the terms, the contract is still not enforceable.
The consideration must be sufficient in a fair contract. Let’s say John promises to pay Doe $50,000 for a home valued at $120,000. This is less likely to be deemed an adequate consideration—it’s not realistic. However, if John promises to pay $100,000 for a home valued at $120,000, it is more likely to be deemed adequate consideration due to the closeness of John’s offer to the real value.
4. All parties involved must accept the terms
A contract is not legally binding if all parties do not accept the offer. Before writing the contract, make sure that the general stipulation is clearly known by every party in the contract. For example, the various parties should understand that if “X” happens, it will result in “Y”. Legally, this refers to “mutual agreement” or “meeting of the minds”.
It is important to discuss the terms beforehand with other parties to save time. Otherwise, if they reject the contract, it will need to be revised. For example, let’s say your contract says:
“John Doe will sell his 2022 Mitsubishi Mirage in exchange for $15,000.”
If the price and details of the exchange have not been agreed upon before the contract was written, it will be revised. This may delay the contract and encourage haggles.
Therefore, you must have an agreement in good faith. Every party needs to mutually assent to the terms for there to be an agreement. No party must be forced or coerced to accept the terms of the contract, otherwise, it will not stand.
Your written contract must be fair and honest. The terms must be clear for all parties to abide by the requirements.
How to write a contract to yourself
Having known that anybody can make a legal contract on their own and as long as the important elements are included and both parties are legally competent and consent to the agreement, below are the steps to write one yourself:
1. Begin with basic information
Start by writing the date at the top of the page followed by the names or company names of the parties involved in the format below:
This contract is between [entity] and [entity].
If the contract is between businesses or an individual and a business, include the legal title of the business using designations like “LLC” or “Incorporated.” If available, include other identifying information such as a person’s title.
2. Describe the services or goods being exchanged
Use clear language to detail the consideration to be exchanged. Your language must be easy to understand when describing what goods or services are being exchanged, including money for services if that is the case.
Write in short paragraphs and number the heading for each paragraph for easier reference. Avoid verbose language because, in court, the judge decides the case the same way the average person would interpret the contract. Nevertheless, some jargon (terms or phrases) have historical precedents and exact legal meanings that facilitate how the court interprets the contract.
Your contract should include clearly and in detail, what one party is promising to deliver and what the other party agrees to pay or do in exchange. Suppose the deal includes services:
- describe the services to be performed;
- the person who will perform it;
- for whom;
- for how long, and
- for what consideration.
A basic example is a contract with terms that require services for money:
John Doe agrees to proofread 1,000 pages for Forbes Publishing by January 5, 2022, for a flat rate of $6,000, to be paid in full within 30 days of delivery.
A basic example of a contract with terms that require services for services:
John Doe agrees to mow my lawn once each week for one month beginning from May 7, 2022, in exchange for me to help him re-tile his roof on June 6, 2022.
If your contract involves selling real estate, it should include a legal description of the property and its exact location. It is advisable to seek the assistance of a real estate agent or a lawyer because legal descriptions of real estate have very specific requirements that you may find difficult to provide them yourself.
If you are selling goods, describe the item’s make, model, color, size, delivery date, and any other identifying information.
3. Add an addendum to your contract
Addenda may be necessary for your contract if you forgot certain detail in the contract or if the details of some aspects of the contract are cumbersome to include. You can add addenda at the time of the contract or later, so far all parties to the contract sign off on (or initial) it.
4. Consider including a confidentiality clause or a Non-Disclosure Agreement (NDA)
If you do not want the other party to share the contract information with others, consider a non-disclosure clause to forbid the other party from disclosing any information. From the SEC archives (in the Securities Exchange Act of 1934), “Confidential Information shall collectively refer to all non-public information or material disclosed or provided by one party to the other, either orally or in writing, or obtained by the recipient party from a third party or any other source, concerning any aspect of the business….”
You could have the other party sign an NDA before entering the contract which will make them face legal action if they share your information. A mutual NDA will protect all parties from sharing each other’s information.
A confidentiality clause protects the party from exposing trade secrets. It may also require one party to return the other party’s information or property once the contract is fulfilled.
5. Include a contract termination clause
Include a clause that describes the termination process of the contract. Specify the contract duration. If it’s a one-time exchange of services, include that the contract will be terminated upon completion of the transaction. However, for ongoing services, you could state that either party may end the contract by giving 30 days’ notice. Of course, contracts may be terminated without cause. Here are samples provided by Law Insider in their publication Termination by Either Party Without Cause Sample Clauses.
Your contract also needs language about what will happen if one party breaches the contract. For example:
This contract is null and void if John Doe does not mow my lawn once each week for one month starting from May 7, 2022, in exchange for me to help him re-tile his roof on June 6, 2022.
A minor breach of contract, however, may not void the rest of the terms. For example, if John Doe failed to start the lawn mowing on May 7, 2022, due to severe illness, it may be considered a minor breach since Doe obviously cannot do the job in his current condition. Nevertheless, you may be eligible for a reasonable remedy to take care of any inconvenience.
You need dispute resolution terms that specify how any issue can be handled in the event of a breach. Specify the following:
- who will pay attorney’s fees and court costs
- the jurisdiction of any court action (city or county and state)
If you are writing a contract for a small business, consider including a mediation or arbitration clause. This is a popular alternative to litigation since all parties can select the arbitrators, and it is less expensive and formal than court.
6. Your contract should be legally binding
Research to know the state and federal laws applicable to the contract to make sure it is legally enforceable. Let’s say the contract is for a construction project. It will need a clause stating that the contractor will show no gender or ethnic discrimination.
Note that contracts for illegal goods or services are not legally binding. These are void contracts and cannot be enforced or subject to remedies or damages.
7. Provide the signing page
In most legal documents, the last page is referred to as the signing page. Include a dark line for the signature and the name of the individual or company name underneath.
There should also be a line to print your name or to fill in contact information. You also need spaces for the date the contract is signed.
How do you execute a contract?
The last step is to finalize the agreement after all parties have signed and agreed to the terms.
1. Review your contract
Look up similar contract samples online or in books to see how legal experts have written theirs.
Before you make an offer or sign it, have the contract checked. Have an attorney check it or use an online contract checking service.
2. Make an offer
When done writing the contract, forward it to the other party to go through. They may accept or reject the contract or sometimes make a counteroffer, or propose changes that should be made before they accept the contract.
You could always speed up the process by including a date by which the other party should sign, address, or reject the contract. The other party has an obligation to respond within a reasonable amount of time. However, a “reasonable amount of time” is highly subjective. For example, when negotiating the terms of employment, the other party has to respond as quickly as possible, but can ask for 24 hours or a few days to consider the offer if they need time to think about their options—Jamie Birt via Indeed.
You can revoke the offer as long as it has not yet been accepted [Nolo], meaning that if you make an offer and the other party wants some time to think it through, or makes a counteroffer with changed terms, you can revoke your original offer.
If the other party accepts the offer, you’ve entered into a binding agreement.
3. Negotiate the contract
Make sure to negotiate the contract until you and the other party are satisfied with the terms and the language.
Specify the schedule and payment method (cash, check, credit card, or mobile payment like PayPal) in the contract. It could be a down payment and follow-up installments, a monthly payment, or even a full amount.
Additional negotiations include debating contract provisions. For example, a contract for a purchase may include provisions for delivery, payment, and remedies for breach of the contract.
4. Sign the contract
When the contract agreement is finalized with the other party involved, sign and date it. In place of written signatures, you could use electronic signatures via tools like DocuSign or Adobe Document Cloud. Electronic signatures are granted the same legal status as handwritten signatures under state laws and carry the same weight and legal efficiency as handwritten signatures and paper documents.
Finally, you could stipulate that the contract becomes effective upon signing or specify a certain date when the contract becomes effective. Have a copy of the contract for your reference.
This article only provides legal information and is not legal advice. Contact your local licensed attorney for legal advice.