How to Make a Contract: A Comprehensive Guide

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Are you looking to draft a legal document that spells out an agreement between two parties? If so, you may be wondering how to make a contract that is comprehensive and legally binding. A contract serves as a written record of an agreement that can be enforced in court if necessary. In this article, we will guide you through the steps on how to make a contract, explain the key elements of a contract, and provide you with tips and tricks to ensure that your contract is accurate and legally binding.

Steps how to make a contract

Drafting a contract may seem challenging at first, however, it is an important skill to have in the business world. Follow these twelve steps to make a contract that covers all the critical details:

Step 1: Identify the Parties Involved

The first step in creating a contract is to identify all parties involved in the agreement and state their names in the document. This should include the full legal name of each party, their address, and other relevant details.

Step 2: Define the Subject of the Contract

Clarify the subject or specific purpose of the contract. This is the main reason for the agreement and should be stated in detail in the contract.

Step 3: List the Obligations and Responsibilities of Each Party

In this step, clearly define the obligations and responsibilities that each party has agreed to fulfill. Ensure that each responsibility is explicit and agreed upon by both parties.

Step 4: Specify the Payment Terms

Specify the payment terms of the contract, including the amount and frequency of payment(s) and any other relevant information on the payment structure.

Step 5: Include a Timeline or Deadline for Completion

Include a realistic timeline or deadline for the performance of the obligations and expectations detailed in the contract. This should be agreed upon by both parties and clearly stated in the document.

Step 6: Include the Governing Law

Specify the governing law that will apply in the event of a dispute between the parties. This will help to protect the parties’ interests and ensure that the agreement can be enforced legally.

Step 7: List any Required Approvals or Permits

If there are any approvals or permits required for the completion of the agreement, include them in the contract. This will ensure that both parties are aware of any necessary formalities and can fulfill them when required.

Step 8: Address Any Potential Disputes or Conflicts

Include a conflict resolution section that outlines the steps both parties will take to resolve any disputes that may arise. This will help avoid unnecessary litigation and protect the interests of all parties involved.

Step 9: Include a Termination Clause

Include a termination clause that outlines the circumstances under which the contract can be terminated by either party. This will provide clarity and transparency in case the parties need to end the agreement.

Step 10: Add Signature and Date Lines

To make the agreement legally binding, include signature and date lines for both parties to sign and date the contract once they have read and agreed to the terms.

Step 11: Review and Edit the Contract

Before signing, ensure that the contract’s language is clear and concise, and all details are accurate. Make necessary edits and revisions until both parties are satisfied with the agreement.

Step 12: Finalize and Store the Contract in a Safe Place

Once the agreement has been signed by both parties, make sure to store the original copy in a secure location for future reference.

Explanation how to Make a Contract

A contract is a legally binding agreement. It should specify the roles, responsibilities, and obligations of each party to the agreement. Below are some important elements to keep in mind when making a contract:

Clear Language

To be legally binding, a contract must be clear and concise. Avoid using technical terms or jargon that may be misunderstood by the other party. All parties must be able to understand the terms of the agreement.

Legal Requirements

A contract must meet several legal requirements to be considered valid and enforceable. These include the capacity of the parties to enter into an agreement, the absence of fraud or coercion, and a clear agreement.


All aspects of the agreement, including payment terms, deadlines, and other obligations, should be stated clearly and concisely. This will help avoid confusion and misunderstandings.

Termination Clause

A termination clause should be included in the agreement to clarify the circumstances under which the contract can be terminated by either party. This will help avoid any confusion regarding the fate of the agreement should any disputes arise.

Dispute Resolution

Inclusion of dispute resolution in the contract will help reduce conflict and ensure that appropriate measures are taken to resolve disputes in a timely and legal manner.

Tips and Tricks how to Make a Contract

Writing a contract can be challenging, but below are some tips and tricks that can assist you in making a comprehensive and legally binding agreement:


Thorough research and understanding of the subject matter and legal requirements for the agreement will help ensure that the contract meets all legal standards and serves the parties’ interests.

Be Specific

Be specific about the obligations and duties of each party so that there is no confusion or misunderstanding about their respective roles.

Consult with a Legal Professional

It is recommended to have an attorney review the agreement to ensure that all legal requirements are met, and that the document is legally enforceable.

Use Templates

Using templates can help make the contract drafting process more efficient and ensure that all necessary elements are included.

Include Confidentiality Provisions

If there is proprietary or confidential information involved in the agreement, consider including a confidentiality provision to ensure that all parties agree to keep any sensitive information confidential.

Revise and Edit

Take time to review the document and ensure that all obligations and details are stated clearly and accurately. Several revisions may be necessary to ensure that the agreement is satisfactory and legally binding.

Sign and Date

Be sure to include signature and date lines for both parties to sign and date the document once they have agreed to the terms.

Keep Original Copy Safely

Store the original copy of the agreement in a safe place for future reference.

Stick to Your Word

To maintain the integrity of the contract, ensure that all parties fulfill their respective obligations and responsibilities as agreed upon in the document.

In conclusion, making a contract is a critical skill that can benefit individuals and businesses alike. By following these steps, understanding key elements, and incorporating these tips and tricks, you can ensure that your contract is comprehensive and legally binding.

Advantages and Disadvantages of Making a Contract


1. Clarity – A contract provides a clear understanding of the expectations and obligations of both parties involved.

2. Legal protection – A contract legally binds both parties to the agreed-upon terms, protecting each party from potential breaches.

3. Avoiding disputes – Clear communication during the contract negotiation process can help prevent misunderstandings that could lead to disputes.

4. Record-keeping – Contracts help maintain a record of all information and transactions, making it easier to establish and settle disputes.

5. Flexibility – Contracts can be customized to suit the needs of each party involved in the agreement.

6. Liability protection – A contract can outline terms that limit a party’s liability, protecting them from unforeseen circumstances.

7. Security – A contract can provide a sense of security between parties by outlining obligations and preventing unexpected changes to the agreement.

8. Collaboration – The process of creating a contract encourages collaboration and open communication between parties, which can enhance the relationship.

9. Peace of mind – A contract can provide peace of mind, knowing that the agreement is legally binding and enforceable.

10. Professionalism – Entering into a contract shows professionalism and a commitment to following through on agreed-upon terms.


1. Legal complexity – Contracts can be complicated and require legal expertise to properly interpret and enforce.

2. Cost – Creating a contract can be expensive, especially if legal assistance is required.

3. Time-consuming – Developing a contract takes time and effort, and negotiations can often be lengthy.

4. Rigidity – A contract can be too rigid, leaving little room for unexpected circumstances or changes to the agreement.

5. Misinterpretation – Despite efforts to clarify terms, contract language can still be misunderstood, leading to disputes.

6. Lack of trust – Insisting on a contract can create mistrust between parties, conveying a lack of faith in the relationship.

7. Enduring obligations – Parties are legally bound to fulfill obligations outlined in the contract, even if circumstances change.

8. Limited flexibility – Some contracts may be too rigid, restricting parties from making changes that could benefit both parties.

9. Legal disputes – Despite having a contract, legal disputes may still arise, resulting in costly and time-consuming legal battles.

10. Breach of contract – If one party breaches the contract, the other party may incur damages, affecting the relationship between parties.


What is a contract?

A contract is a written or oral agreement between two or more parties that creates a legal obligation to fulfill certain terms and conditions.

Who can make a contract?

Anyone who is legally authorized to enter into an agreement can make a contract. This can be individuals, businesses, or organizations.

What are the essential elements of a contract?

The essential elements of a contract include an offer, acceptance, consideration, legal capacity, and legal intent.

What should be included in a contract?

A contract should include the names and addresses of all parties involved, the terms and conditions of the agreement, the duration of the contract, and the payment terms.

How do I make a contract?

To make a contract, you need to create a written document containing the terms and conditions of the agreement, and have all parties involved sign it.

Do I need a lawyer to make a contract?

While it is not always necessary to have a lawyer to make a contract, it is recommended to have one review the contract to ensure that it is legally binding and protects your interests.

What are the consequences of breaking a contract?

If a party breaches a contract, they may be liable for damages or may be required to fulfill the terms of the contract.

Can a contract be changed after it is signed?

A contract can be changed after it is signed if all parties involved agree to the changes and the changes are made in writing and signed by all parties.

What is a breach of contract?

A breach of contract occurs when a party fails to fulfill the terms and conditions of the agreement outlined in the contract.

How do I enforce a contract?

If a party breaches a contract, a court may enforce the contract and award damages to the non-breaching party.

Are all contracts legally binding?

No, not all contracts are legally binding. For a contract to be legally binding, it must include the essential elements of a contract and be entered into by parties with legal capacity and intent.

What is the statute of limitations for a contract?

The statute of limitations for a contract varies by state and depends on the type of contract and the nature of the breach.

What should I do if I have a dispute over a contract?

If you have a dispute over a contract, you should first try to resolve the issue through negotiation or mediation. If these efforts are unsuccessful, you may need to take legal action.

Conclusion: How to Make a Contract

In conclusion, creating a contract is a critical process that requires thorough planning, communication, and legal knowledge. It is important to keep in mind that contracts are legal documents that can be enforced in a court of law, and therefore, should be approached with attention to detail and professionalism. By following the steps outlined above, you can ensure that your contract is clear, concise, and effective in achieving your desired outcome. Remember to always seek legal advice when drafting a contract and to include appropriate legal language to protect your interests.

Closing: How to Make a Contract

Thank you for reading this article on how to make a contract. We hope that you found the information helpful and informative. Remember that creating a contract is a crucial aspect of any business or personal agreement, and taking the time to properly draft and execute a contract can save you time, money, and legal headaches in the future. Always be sure to seek legal advice if you are unsure of any aspect of a contract, and never sign a contract without fully understanding its contents. Good luck and happy contracting!