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Contracts

Contract creation: The only guide you need

Our State of B2B Contracts 2024 report highlights that 77% of respondents believe that the most important thing while signing a contract is that the information is correct and no edits are necessary. This clearly shows how important it is to create well-written, accurate and error-free agreements.

However, contract creation can be a daunting task. Drafting legal agreements that protect the rights and interests of all parties involved requires careful consideration and attention to detail. In this guide, I will explore the basics of contract law, the steps involved in drafting a contract, the legal considerations to keep in mind and the role of lawyers in the process. I’ll also show you Oneflow, a tool you can use to create contracts much more easily.

Understanding the basics of contract creation

A contract is a legally enforceable agreement between two or more parties, which sets out the rights and obligations of each party. It’s a fundamental aspect of business and personal transactions, providing a framework for ensuring that promises and obligations are fulfilled.

Contract creation is a complex process that requires a solid understanding of contract law.

See also: What are digital contracts?

A bunny sitting on yellow books to symbolize how easy it is to create contracts with Oneflow

Types of contracts

Contracts vary depending on the nature of the agreement and the parties involved. Some common types of contracts include:

  1. Sales contracts – used when goods or services are being bought or sold. These contracts specify the terms of the sale, including the price, quantity and delivery of the goods or services. Check out our articles on writing car sale agreements, landscaping contracts, social media marketing proposals and web design proposals.
  2. Purchase agreement – this is the final document confirming the property transfer from the seller to the buyer. It’s signed by both parties after the sales contract is finalized.
  3. Non-disclosure agreement – sometimes also called a confidentiality agreement, it specifies that the parties aren’t to disclose any information (typically trade secrets) covered by the agreement. 
  4. Vendor agreements – this type of contract details the key terms covering an exchange of goods or services in return for compensation. It may include prices, delivery methods and parties’ obligations.
  5. Employment contracts – used to formalize the relationship between employers and employees. They typically outline the terms of employment, including job duties, compensation, benefits and termination procedures.
  6. Partnership agreements – they set clear boundaries and expectations for relationships between a business owner and their partner to help them avoid misunderstandings and problems down the line. There’s also a special type of agreement called third-party contract, which involves the participation of another party that also has an obligation to fulfill or a benefit to acquire.
  7. Service-level agreements (SLA) – contracts between service providers and their clients. They outline the details of the expected service and are often used in industries such as IT, healthcare etc. There are also somewhat similar statement of work contracts designed for project management. 
  8. Supplemental agreements – additional documents that modify existing contracts. They address specific provisions, terms, conditions or new circumstances.
  9. Rental agreements – signed when one party agrees to rent property to someone else. This type of contract specifies the rental terms, including the lease duration, the rent amount and any additional terms or conditions.
  10. Construction contracts – used in the construction industry to formalize agreements between property owners and contractors. They outline the scope of work, the timeline for completion and the payment terms.

Each type of contract may have specific requirements and provisions that need to be addressed during the drafting process. Consult with legal professionals or experts in the particular field to ensure that all necessary provisions are met and that the contract accurately reflects the parties’ intentions.

See also: Free contract templates

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Steps to drafting a legally binding agreement 

Creating an agreement requires several steps that make the contract legally binding, clear and enforceable. Let’s explore them in detail.

Identifying the parties involved

The first step includes identifying the parties and providing their full legal names and contact information. You also need to specify everyone’s roles and responsibilities.

Detailing the terms and conditions

Once the parties are identified, the next step is to outline the terms and conditions of the agreement. This includes defining the scope of work, delivery timelines and any requirements or conditions that must be met. Be as specific and detailed as possible to avoid ambiguity.

Setting the payment terms

Contracts usually involve financial transactions, so remember to spell out the payment terms. Specify the amount, due dates and any penalties or incentives related to payment. Both parties should agree on these terms to ensure a smooth financial workflow.

Including termination clauses

No one likes to think about it, but sometimes you must terminate contracts. Including termination clauses in the contract allows both parties to clearly understand the circumstances under which the agreement can be ended. These clauses should outline the notice period, obligations upon termination and any associated fees or penalties.

A smartphone displaying a ping-pong paddle to show how easy contract creation is

Contract law is a branch of civil law that deals with forming and enforcing written contracts. It includes various legal principles and rules that regulate contractual relationships.

Regardless of their nature, all contracts must contain certain essential elements to be considered valid. These include:

  • Offer – one party makes a clear proposal to another, with specifics and openly communicated terms.
  • Acceptance – the party receiving the offer unequivocally agrees to the mutually understood terms as presented.
  • Awareness – all parties have a common understanding of the contract’s terms and conditions. 
  • Consideration – something of value is exchanged between the parties (a product, money, a service etc.).
  • Legal capacity – all parties entering the contract can do so from a legal standpoint (they’re of the right age, sound mind, etc.).
  • Lawful object – the contract’s subject matter is legal and not against public policy.

It is crucial to ensure that these elements are present – an absence of even one of them results in a contract that may be considered invalid or unenforceable, leading to potential disputes and legal complications.

See also: In order for a contract to be valid, it must…

Additionally, contracts should also include other provisions that are specific to the type of agreement being made. For example, a sales contract may include provisions regarding the price, quantity and delivery of goods, an employment contract would include job duties, compensation and termination, while partnership agreements specify the terms and conditions of the cooperation between parties.

By ensuring that all necessary components are present and clearly defined, parties can minimize the risk of disputes and protect their rights and obligations.

See also: What are legal contracts?

The role of lawyers in contract creation

As you probably already guessed, lawyers play a vital role in the contract creation process. Let’s explore the critical aspects of their involvement.

Reviewing the contract

Before signing a contract, have it reviewed by a qualified lawyer. They ensure that all the legal requirements have been met, identify potential risks, and suggest necessary amendments to protect your interests. This step is crucial for complex or high-value contracts.

See also: Creating smarter contracts with AI contract maker

Negotiating contract terms

Lawyers can also assist in negotiating the terms of the contract on your behalf. They understand contract law and help you navigate complex legal language, ensuring your rights and interests are secured in the final agreement.

Resolving contract disputes

When a contract dispute happens, lawyers can provide expert advice and represent you in legal proceedings. They have the knowledge and experience to assess the situation, explore possible solutions, and take appropriate legal action. Having a lawyer by your side can significantly increase the chances of a favorable outcome.

Creating a well-drafted contract is essential for protecting your rights and interests. By understanding the basics of contract law, following the proper steps in contract creation, considering legal aspects, and involving lawyers when needed, you can ensure that your contracts are enforceable and provide a solid foundation for your business relationships.

Easier contract creation with end-to-end contract management software

Oneflow contract creation and automation software dashboard

Now that we have all the basics and formalities out of the way, let’s actually help you create contracts! Dedicated software optimizes contract creation and management. For example, Oneflow is a contract management software solution that can help you streamline and automate various contract-related processes in your company, from the pre-sign stage to post-sign activities. 

It’s easy to use and offers powerful features, such as:

  • Oneflow AI – Import your existing contracts (you can do this in bulk) and use AI tools to review them for compliance problems and errors. Oneflow also lets you quickly find whatever information you need in your entire contract database with an AI search feature. Our AI assist is with you every step of the way to help you write, edit and manage your contracts.
  • Dynamic templates – Generate contracts easier and faster than ever thanks to customizable, shareable templates for different types of agreements (e.g. employee contracts, sale contracts). You can also create your own with our intuitive builder.
  • Collaboration tools – Track the contract creation, editing and signing process at every step. Monitor critical data (such as the number of times people open the file). Streamline contract lifecycle management thanks to the built-in calendar. Oneflow allows multiple people to work on the same project simultaneously and facilitates approval requests when necessary.
  • Contract management features – Optimize your contract creation and management with notifications, customizable reminders and admin roles.
  • E-signatures – Sign legally binding contracts with e-signatures using several methods (standard e-signature, SMS verification, handwritten signature, electronic identification).
  • Workspaces – Streamline and optimize contract management thanks to branded workspaces customized for your company’s contract workflow. Run audit trials, share comments and video screen recordings, and configure triggers and rules to restrict access.
  • Advanced search and analytics – Find key information about specific agreements, contract data, terms and clauses quickly in our centralized repository. Oneflow also monitors key metrics and engagement data (open rate, number of visitors etc.) to improve future cooperation on each new contract agreement.
  • Integrations – Customize Oneflow for different use cases with various types of integrations, including CRM platforms, HRM systems and project management tools (HubSpot, Teatailor, Salesforce etc.).

Do you want to access contract automation tools and start streamlining your processes? Sign up for a 14-day free trial, or book a demo with our team.

Automate the contract creation process with Oneflow

Once you have all the necessary details and information, you can finally draft the document. The easiest way to do it is to use contract automation software with a powerful AI contract maker like Oneflow. Thanks to a helpful integration with Microsoft Word and PowerPoint, the platform even allows you to generate legal agreements directly from your document file (you just have to use the Oneflow add-in).

Let’s illustrate how easy contract creation can be with an example of Oneflow and MS Word integration.

Oneflow add-in’s icon

From MS Word, access the Oneflow add-in and simply click Create Contract. Name it, select a workspace and choose a contract template you want to use (thanks to this, the process will be much faster).

You can customize the template (change the contract’s contents) however you like to suit your particular scenario. Feel free to save it at any point and edit it directly in Oneflow. Once you’re done, click the + Add counterparty button,  choose its type (Company or Individual) and fill in the mandatory fields. Select a role for this participant (Signatory, Influencer or Viewer) and repeat these last few steps for every counterparty you want to include.

Oneflow’s participant information screen

When finished, click Send, specify the Subject and Message, and then click Send once again – the contract will be dispatched to the participants’ email inboxes. 

Oneflow sending screen

Remember that you can monitor the status of your contracts at any time – simply click the contract status icon to access all essential information.

Oneflow status tracking screen

Create contracts with ease

Contracts are complicated – you have to consider many factors, such as the elements required for it to be legally binding, the details of the offer, participants’ information, and so on. Creating such documents manually requires much work and effort, and let’s face it – your legal team has only so much time. Because of this, you should do everything you can to make this process as efficient and effective as possible. You can take several steps to improve things, but the most significant factor, by far, is your choice of software.

Oneflow is a contract management platform with great contract creation features and a suite of AI-based enhancements that streamline the process of writing and reviewing agreements. Interested? Book a demo or check out our 14-day free trial to see Oneflow in action!

FAQs

How do I create a contract? 

Oneflow lets you create contracts directly from within Microsoft Word. You can use our templates to streamline the process – choose one, customize it, select participants, specify any required information, and then send the contract to counterparties via an email message.

How are contracts formed? 

You can create contracts manually or use specialized software. Manual contracts (the conventional method) involve physical documents signed in ink, often requiring in-person interactions or postal services for delivery. Digital agreements are formed electronically and can be executed with legally binding e-signatures, making them much more convenient. Such documents are also stored electronically (usually in a safe cloud environment).

What are the 4 basics of a contract?

Most sources mention six essential elements of a contract: offer, acceptance, consideration, and intention.

Why are contracts created?

Contracts are fundamental for business and personal transactions. They serve as legally binding agreements that formalize relationships and outline all parties’ rights, responsibilities and obligations.

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