What are the elements of a contract?

A legal contract is an agreement between two parties that creates mutual, legally enforceable obligations. Certain essential elements must be present before a written contract is binding, including: identification (names) of the parties, the purpose of the agreement, a detailed statement of the rights and obligations of each party, what each party is giving (e.g., money, products, or services) in exchange for what they’re getting, the term of the agreement (when it starts and when it ends), termination rights (when and under what circumstances one or both parties can end the contract before the normal end date), liabilities of the parties if something goes wrong or they have a dispute, signatures, and many other provisions.

For example, let’s use a contract where a homeowner hires a contractor to remodel their kitchen (these are just examples, and are not intended to be used or relied on for your contract).

Identification of the parties

“This agreement is between John D. Homeowner (“Homeowner”) and Acme Construction, Inc. (“Acme”) for remodeling work to be done at 123 Maple St., Anytown USA.”

Rights and obligations of the parties

These would be too numerous to list here, but they might include statements like “Acme will remodel Homeowner’s kitchen, including replacing and installing the cabinets, countertops, sink, oven/stove, and faucet (collectively, the “Materials”) chosen by Homeowner. Acme will use commercially best efforts to complete the work by [insert date] (the “Completion Date”). Homeowner will make the home available during weekday hours from 9am-5pm.”

What each party is giving

“Acme will complete the remodel, by the agreed upon completion date, and will perform the work and Materials installation according to industry standards and best practices. Homeowner will pay Acme ten thousand dollars ($10,000) for the labor, consisting of an upfront payment of $5,000 to be paid at the start of the work and the remaining $5,000 to be paid when the work is complete. Homeowner may pay Acme by check. Homeowner will also order and pay for Materials, and Acme will pick up the Materials from each provider.”

Term

“This Agreement shall begin on the date the second of the two parties hereto signs it, and shall end when the work is complete.”

Termination rights

“Acme may terminate this Agreement on thirty days’ written notice if Homeowner’s check for the initial payment is returned by the bank for insufficient funds, or if Homeowner fails to obtain and pay for the Materials. Homeowner may terminate this Agreement at any time before Acme begins work, but not thereafter unless Acme commits a material breach of this Agreement.”

Obligations and rights if something goes wrong

In this case, it would only likely be on Acme’s side, since Homeowner’s obligations are limited to paying for the labor and materials.

“Acme shall correct any mistakes in the labor within thirty days if, in Homeowner’s commercially reasonable opinion, it negatively affects the cosmetic, functioning, stability, use, or safety of the kitchen. Homeowner shall pay Acme in cash within three days if either check bounces.”

Dispute resolution

“In the event of a dispute between the parties that cannot be resolved within thirty days, the parties shall mediate the dispute using an American Arbitration Association (AAA) arbitrator, with each party paying their own expenses. If the mediation does not resolve the matter, the parties shall submit the dispute to AAA for binding arbitration.”

Of course, there are many other parts of a contract, but this gives you an idea of what some key provisions could look like.

Lawyers spend years in law school and then in practice to learn how to properly draft a contract so it’s enforceable, but you can use Jotform form contracts with just a few clicks. We recommend that you check with your own lawyer before using any form of contract to make sure it covers all the necessary bases for what you’re trying to achieve.

Collecting a legally binding signature can be just as important as writing a contract. Consider using a signature collection tool like Jotform Sign. Every contract you create with Jotform Sign automatically becomes part of a workflow, so you never have to manually track your document or hunt for an audit trail. Jotform Sign’s drag-and-drop Sign Builder makes it easy to add and delete signers, just in case you need to make any changes before the contract is signed. Additionally, Jotform Sign templates are fully customizable, so you can tailor your contract to fit your needs.  

There are a huge number of types of contracts (too many to list here) that people use, but check out our website to see the form contracts available through Jotform. We’re adding forms all the time!

AS ALWAYS, CONSULT AN ATTORNEY BEFORE RELYING ON ANY FORM CONTRACT OR  CONTRACT TEMPLATE. THE CONTENT ABOVE IS FOR INFORMATIONAL PURPOSES ONLY.