How Do You Structure a Contract?

Depending on your situation, a contract can be very simple and include the bare essentials or highly complex with intricate terms and clauses. So there is no one-size-fits all approach to structuring a contract because it comes down to the particular agreement. In saying this, there are basic ways to structure a contract and a basic format that can be loosely applied to different agreements.

What Is the Basic Structure of a Contract?

When drafting a contract, it's crucial to understand its fundamental components. Each section serves a specific purpose to ensure that the agreement is clear, enforceable, and fair to all parties involved. By including these essential components, a contract becomes a robust document that protects the interests of all parties and clearly delineates the terms of the agreement. Whether dealing with a simple rental agreement or a complex business contract, adhering to this structure helps ensure clarity, fairness, and legal enforceability.

Here’s a breakdown of the basic structure of a contract:

Section 1: Key Players

This section should include who the contract involves, the companies or individuals and the date on which the agreement was made. In legal terms, “parties” refer to the individuals or entities involved in the contract. This information also facilitates communication between parties if issues arise. It should be clear what each party’s role is and what they are responsible for so that it is clear when one party does not uphold their obligations according to the contract.

Section 2: Agreement

The core of any contract is the agreement itself, which outlines what the contract is about. This section should clearly state the mutual understanding between the parties. 

Section 3: Consideration

“Consideration” is a legal term that essentially refers to what each party is exchanging under the contract, often involving money. Consideration can also include other forms of value, such as services or goods exchanged. Clearly specifying the consideration is crucial as it legally binds the paying party to fulfil their payment obligations.

Section 4: Terms and Conditions

This section details the obligations and rights of each party, often making up the bulk of the contract. Although lengthy, it is necessary to clearly outline what each party is agreeing to, preventing future conflicts. Terms and conditions ensure that both parties understand their responsibilities and the specific rules governing the agreement and how the contract can be terminated.

Section 5: Signature

A contract is only enforceable once it is signed by all parties involved. Including space for signatures and dates is essential. The date of signing can be critical, as it may affect the contract’s start date or determine when specific obligations begin. Ensuring all parties sign and date the contract solidifies its enforceability and provides a clear timeline for its terms.

How to Write a Simple Contract Example?

You could write a simple contract by including all of the above details such as the parties involved, the agreement, the consideration, terms and conditions and a signature from both sides. It is likely that this simple contract would be legally binding providing it is not unreasonable, however, if you want to ensure that you can rely on the contract, it is a good idea to have it checked or drafted by a qualified contract lawyer. 

What Legally Needs to Be in a Contract?

A contract, whether written or made orally becomes legally binding when it includes four important elements, an offer, an acceptance of the offer, consideration (for example money or a service) and an intention to create legal relations. 

What Are the Risks of Not Having a Contract?

Not having a contract exposes parties to significant risks including legal ambiguities, lack of enforcement, unclear responsibilities, financial disputes, and no proof of agreement. 

Without a formal contract, roles and obligations can become vague, leading to unmet expectations and conflicts. Additionally, the absence of confidentiality clauses can result in unauthorised sharing of sensitive information. Contracts also prepare parties for unforeseen changes and protect intellectual property rights. 

It’s therefore important to make sure you have a contract in place and are able to legally rely on it.

Automate Your Contract Drafting Through AI and Human Lawyers With Gerrish Legal

At Gerrish Legal, we've revolutionised contract drafting with our Contract Portal and the introduction of our AI bot, your personal digital lawyer. 

Through our innovative automation tool, you can effortlessly generate bespoke Service Agreements and Confidentiality Agreements by interacting with our intelligent Gerrish Legal bot. 

By simply answering a series of questions, tailored to extract the necessary information, the bot uses pre-drafted terms and clauses crafted by our highly experienced contract lawyers. Once the responses are provided, the bot swiftly assembles the contract, customising it to suit the unique needs of each client. 

This seamless process not only saves time and effort but also minimises the risk of errors. You don’t have to rely on the capacity of our lawyers, you can call on our legal bot at any time that suits you. 

We understand the importance of clarity and comprehension, which is why our clients have the option to seek clarification or further guidance from our human legal team once the contract is produced. With Gerrish Legal, harnessing the power of AI simplifies contract drafting without compromising on quality or client support.

You and your contracting party will have a secure and coherent agreement that you can rely on, giving you the peace of mind you need when doing business with third parties. If you want to benefit from our automated contract drafting tool, you can access our contract portal here. You can also book a 30-minute consultation with one of our human lawyers if you need any bespoke advice!

How Can Gerrish Legal Help?

Gerrish Legal is a dynamic digital law firm. We pride ourselves on giving high-quality and expert legal advice to our valued clients. We specialise in many aspects of digital law such as GDPR, data privacy, digital and technology law, commercial law, and intellectual property. 

We give companies the support they need to successfully and confidently run their businesses whilst complying with legal regulations without the burdens of keeping up with ever-changing digital requirements. 

We are here to help you, get in contact with us today for more information.