Forming A Contract

Many lawsuits start as a result of not using a contract, having a poorly worded contract, or after one or more parties break one or more terms on a contract. A contract is no stronger than the weakest of the parties signing it.

This article is my opinion, and not legal advice. I am a judgment recovery referral expert, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.

If you are using the same contract with many people or companies over several years, you will probably have updated and revised your contract several times. If you copy or modify an example contract, or are drafting one from scratch, it is a good idea to pay an attorney to review it for use in your state.

The best time to negotiate a contract is early, while all the parties are on good terms. It is OK for contracts to be tilted toward one side’s favor, however they should not be totally one-sided. Contracts should identify benefits for all parties. Even when all the parties sign a contract, a court might someday find certain contracts to be one-sided.

The simpler a contract is, the better chances are, that it will never appear in a courtroom. Try to avoid putting any more than what is necessary into a contract. A few common phrases in contracts include:

A) Should any legal proceeding be necessary to construe or enforce the provisions of this contract, then the prevailing party in such legal action shall be entitled to recover all court costs, reasonable attorney fees and costs of enforcing or collecting any judgment awarded. The venue of any legal proceeding will be the county of County, State. (These kind of wordings limit where someone can start a lawsuit, and also helps to reduce frivolously filed lawsuits.)

B) If a court rules that a particular section of this contract is illegal or invalid, that shall not affect the validity of the remaining provisions. All parties agree that the laws of the state of State shall govern the validity of this contract.

C) This contract shall be binding upon all parties and their respective estates, heirs, successors, and permitted assigns.

D) This contract may be changed only by the written consent of all parties. This contract may not be assigned by either party without written consent of the other. This contract may only be canceled by a mutual agreement between the parties, by either party notifying the other party in writing. This contract is the entire contract between all parties signing this contract.

The more specific, and tied to actions a contract is, the easier it will be to enforce and comply with. Another reason to run contracts past an attorney, is make sure they are not deceptive or unfair.

Ideally, no party would feel forced to sign a contract. A good contract both reduces the chance of a lawsuit, and also increases the odds of a victory, should a lawsuit arise.