Spencer Lanoue
Drafting an agreement between two parties doesn't have to be a headache. Whether you're sealing a business deal or setting terms for a freelance project, a well-written agreement can make everything smoother. Let's break down the steps to writing an effective contract and turn what might feel like a daunting task into something straightforward.
What’s the Purpose of an Agreement?
At its core, an agreement is a mutual understanding between two parties about their rights and responsibilities. It's like having a GPS for your professional relationship, ensuring that both parties are on the same page. While verbal agreements can work in casual situations, written agreements are crucial when stakes are high. They provide a clear reference point, reduce misunderstandings, and can be legally binding if things go south.
Agreements are used in various scenarios. You might need one for a business partnership, a service contract, or even a simple transaction. Each agreement serves its unique purpose. All share the goal of clarity and fairness.
Getting Started: Basic Elements of an Agreement
Before you start drafting, it's essential to know what should be included in an agreement. Let's dive into the fundamental elements:
- Parties Involved: Clearly identify who's entering the agreement. Use full legal names to avoid confusion.
- Purpose: State why you're drafting the agreement. What are you trying to achieve?
- Terms and Conditions: Outline what each party is promising to do or not do. This includes deliverables, deadlines, and any specific terms.
- Payment Details: If money is involved, specify amounts, payment methods, and timelines.
- Duration: How long does the agreement last? Is it ongoing, or does it expire after a specific period?
- Termination Clause: Explain how the agreement can be ended and under what circumstances.
- Signatures: Both parties need to sign to show their consent and understanding.
Gathering these elements may seem like a lot, but they lay the groundwork for a solid agreement. Once you have these basics, you're off to a good start.
Crafting Clear and Specific Terms
Vague language can lead to misunderstandings, so it's vital to be as clear and specific as possible. For instance, if you're drafting a service agreement, instead of saying, "Party A will provide marketing services," specify what those services include. Are we talking about social media management, SEO, email marketing, or all of the above? Details matter.
Let's look at an example for clarity:
Party A agrees to provide the following marketing services to Party B:
1. Manage and post on social media accounts (Facebook, Instagram, Twitter) three times a week.
2. Develop and implement a monthly email marketing campaign.
3. Perform SEO optimization for Party B's website, including keyword research and meta tags.
See the difference? This level of detail helps both parties know exactly what to expect and reduces any room for dispute over what's included.
Nailing Down Payment Terms
Money is often a sensitive topic, so getting the payment terms right is critical. Specify the total amount due, any deposits required, payment schedule, and method of payment. Also, consider adding a clause about late payments or penalties to protect yourself.
Here's how a payment clause might look:
Party B agrees to pay Party A a total of $10,000 for services rendered. A deposit of $2,000 is due upon signing this agreement, with the balance payable in monthly installments of $2,000 on the first of each month. Payments will be made via bank transfer. A late fee of $50 will apply for payments received more than five days past the due date.
Having clear payment terms prevents potential disagreements and keeps the cash flow smooth.
Defining the Duration and Termination
Every agreement should have a specified duration. It might be a fixed term (e.g., six months) or contingent on completing certain tasks. Also, include a termination clause that outlines how either party can end the agreement. This could be based on notice periods, breach of contract, or completion of the project.
A simple termination clause could be:
This agreement will remain in effect until December 31, 2023, unless terminated earlier. Either party may terminate the agreement by providing 30 days' written notice. In the event of a breach, the non-breaching party may terminate the agreement immediately by providing written notice to the breaching party.
This clarity gives both parties peace of mind and a clear exit strategy if needed.
Including a Confidentiality Clause
In many agreements, especially in business contexts, confidentiality is crucial. A confidentiality clause protects sensitive information from being disclosed to third parties. This can be particularly important when dealing with proprietary information or trade secrets.
Here's an example of what a confidentiality clause might include:
Both parties agree to keep confidential any proprietary information received during the term of this agreement and not to disclose such information to any third parties without prior written consent. This obligation shall survive the termination of this agreement.
Including a confidentiality clause helps protect the interests of both parties and maintains trust.
Resolving Disputes with an Arbitration Clause
No one likes to think about conflicts, but it's smart to have a plan in place. An arbitration clause can outline how disputes will be handled if they arise. This often involves using a neutral third-party arbitrator instead of going to court, which can save time and money.
Consider a clause like this:
In the event of a dispute arising from this agreement, the parties agree to resolve the issue through binding arbitration conducted in accordance with the rules of the American Arbitration Association. The decision of the arbitrator shall be final and binding on both parties.
With a solid dispute-resolution plan, you can address conflicts efficiently and amicably.
Reviewing and Revising the Agreement
Once you've drafted the agreement, it's time to review it. Check for typos, inconsistencies, and ensure all necessary clauses are present. It might be helpful to have a third party, like a colleague or lawyer, review the document. They can often catch things you might have missed.
Remember, an agreement is not set in stone until it's signed. Both parties should have the opportunity to negotiate terms they're uncomfortable with. It's about finding a balance that works for everyone involved.
The Final Touch: Signatures and Execution
The final step is getting the agreement signed. Both parties need to sign and date the document to make it official. Depending on the nature of the agreement, you might also need witnesses or a notary public to authenticate the signatures.
Once signed, each party should keep a copy of the agreement for their records. This ensures that both have access to the terms in case any future reference is needed.
Final Thoughts
Writing an agreement between two parties doesn't have to be overwhelming. By following these steps, you can create a solid contract that protects both parties and sets clear expectations. And for those who prefer to streamline the writing process, Spell can help you draft, refine, and polish your agreements quickly and efficiently. With Spell, you can focus more on your business and less on paperwork.
