Contracts are extremely helpful legal instruments that compel each party in the agreement to do a certain thing. If a party in a contract defaults on their responsibilities that have been laid out in the contract, then the other party or parties in the contract can file a suit to enforce the contract.
Contracts are often set up by attorneys; this is especially true when large business transactions are taking place, or when an individual is purchasing something that has a high value, such as a home or a car. However, despite the fact that attorneys frequently create contracts, this doesn’t mean that an attorney has to set up a contract for it to be valid and legally enforceable. In fact, individuals can create contracts themselves as long as they know how to do it, and are willing to take the time to do so. When establishing a legally enforceable contract without the help of a lawyer, there are three key components to ensure:
1. The terms must be laid out and agreed to by each party.
In order for a contract to be legitimate, all of the parties in the contract must agree to all of the terms. The number of terms that are involved in the contract can vary widely depending on the nature of the agreement that's being made.
Some contracts may only require one page for all of the terms to be laid out, while others may need many pages. Regardless of the length, the contract will not be valid until every party that is involved in the contract is in agreement about the terms.
2. Something of value must actually be exchanged.
For example, a vendor must agree to provide products to a company, a shipping company must agree to ship goods from another company, and so forth. The reason why a value exchange is required for a contract to be legally enforceable is because if it is not required by the contract, then there's nothing to enforce.
A party in a contract is only responsible for the promises that they make in that contract. If they don't make any, then they cannot be held legally responsible for providing value. However, once a party agrees to provide a certain type of value, and the contract is formalized, then they can be held responsible if they don't live up to the promises that they made. This means that the other party or parties in the contract can file suit against the party for breach of contract.
3. Proof of contract must be established.
To ensure that a contract is successfully enforced through the courts, you need to be able to prove that the contract existed in the first place. The best way to do this is to have everything down in a written format. This means putting the entire contract—including the terms, clauses, provisions, etc.—in writing. Then, make sure that each party signs it.
In certain circumstances and in certain jurisdictions, handshake deals or verbal contracts may be legitimate, which means that they can be just as enforceable as written contracts. However, the problem with these kinds of deals is that they are much harder to prove. If just a verbal agreement took place, then one or more of the parties can simply deny that such an agreement ever occurred. In this situation, enforcing the contract would become significantly more difficult.
Therefore, the best way to create an enforceable contract is to get everything in writing, including a signature of agreement from all of the involved parties. If this is not possible, then try to get a video or audio recording of a verbal agreement or handshake deal.
If the Stakes Are High...
Some lawyers are genuine experts at setting up contracts. In situations where you are spending a lot of money, or may be subject to a high degree of risk, it's probably best to hire a lawyer to draw up a contract. However, for less valuable contracts, it is possible to set up an enforceable contract yourself by going through the steps outlined above.