Stages of drafting a contract

Contents:

• What steps do the parties go through when drafting a contract?
• Key points in the development of the contract
• Additional points that can be identified

Any contract, as a legal form of agreement on the main points of the transaction, is concluded (in most cases) between the two parties. It contains a list of the rights and obligations of the participants, which begin to take effect from the moment of mutual approval by signatures. 

For the correct drafting of the contract and its terms, it is necessary to adhere to a strict sequence, take into account all possible consequences of the transaction and bear in mind all risks.

What steps do the parties go through when drafting a contract?

The most common procedure for drawing up an agreement can be as follows:

• specifying the name of the transaction;
• the introductory part, which specifies the specific parties to the transaction;
• determination of the subject matter of the agreements;
• monetary valuation of relationships;
• deadlines and transfer of funds/property between the parties;
• rights and obligations of participants;
• liability for breach of obligations;
• duration of obligations;
• procedure and possibility of making corrections and amendments to the document;
• identification of the details of the signatories;
• signing the document and registering it.

These stages of creating a contract can be divided into basic and auxiliary stages. The main points reflect the essential parts of the transaction, without which it is easy to invalidate it. Additional steps detail the meaning of the essential terms and conditions and are included in the document without violating the law. It is worth dwelling on them in more detail.

Key points in the development of the contract

The main points of the contract content include:

• Name;
• Subject;
• Price;
• Rights and obligations of the parties.

In most cases, the document itself indicates its name, in simple words – the purpose of drawing up a legal document (for example, “Contract for the performance of construction works”). This provision is not necessary when documenting a transaction, but legal entities often use it for their convenience.

The preamble (introductory part) indicates who is the “Customer” and who is the “Performer”. To this is added the provision of the current legislation on the basis of which the obligation may exist. 

The basis of any agreement is its subject matter, i.e. what the participants need to do to complete the transaction. Without specifying the exact subject matter, an agreement cannot exist in the legal field.

The price is an important stage in the creation of a contract, although the provisions of Civil Law do not consider it as a basis. Payment can be made by transferring funds to the bank details, or in cash (only up to 100 thousand rubles) both at the time of receipt of the product/service, and by way of an advance payment. Also, the document specifies the exact terms of the transfer of funds from the customer to the contractor.

The contract must have a full range of rights and obligations of the parties in relation to the subject of the transaction.

At the time of signing the document, the serial number and the date of conclusion are affixed to it. From this moment on, the mutual obligations are valid, unless otherwise specified in the terms of the transaction.

Additional points that can be identified

For additional information, the following points can be specified in the contract:

• Validity term of the obligation;
• Sanctions for violation of the terms and conditions;
• Details of the parties to the transaction.

The date of the transaction is important for all parties since their cooperation cannot last indefinitely. The agreed conditions must be fulfilled within the exact terms by both sides.

The clause “liability of the parties” means adverse consequences for the participant of the transaction if he does not fulfill his duties or performs them improperly. Common items are payment of a fine, interest rate, penalty, etc.

The contract may have additional provisions that specify the possible procedure for making changes to the terms of the transaction. drafting an additional agreement is possible if one of the parties has changed the details for the transfer of funds or wants to indicate their points of disagreement. The details of the parties indicate their full identification information, the address of legal entities, bank account number, signatures of representatives and seals, if any.