How to write a contract
The sensible pattern is not writing a contract per deal. It is building one standard, having it reviewed once, and generating against it. Here is how to build that standard, and where to stop.
The short version
- Write one standard agreement, have a lawyer review it once, then reuse it.
- Four clauses carry almost all the risk: scope, payment, liability, termination.
- Check the clauses agree with each other. Most bad contracts are internally contradictory.
- Define acceptance, or "done" is whatever the other side says it is.
- Never draft novel terms for a novel situation and sign them unreviewed.
- Stop and call a lawyer at the five points listed below.
One deal runs through this guide: A twelve-month services agreement with Northwind: three phases, $96,000 fixed, Net 45, and a request from their counsel to raise the liability cap.
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01Start with the four clauses that carry the risk
Scope, payment, liability and termination. Everything else in a commercial agreement is either supporting those four or is boilerplate. If your time is limited, spend it here and accept standard wording elsewhere.
On this dealA two-page agreement that defines those four well is safer than a twenty-page one that leaves acceptance undefined. -
02Define the parties properly
Full legal entity names and registration numbers, not trading names. This is the clause that decides who is actually bound, and it is the one most often filled in casually because it feels like admin.
On this deal"Fieldproxy, Inc., a Delaware corporation", not "Fieldproxy". -
03Make scope and acceptance agree
Scope says what is being built; acceptance says how anyone will know it arrived. Written separately by different people at different times, they routinely contradict each other, and the contradiction surfaces at the final payment.
On this dealIf scope promises "a portal" and acceptance requires "sign-off on each phase", say which phases and who signs. -
04Set the liability position deliberately
A cap, usually a multiple of fees paid, and the carve-outs from it. Uncapped liability on a $96,000 contract is a decision, and it should be one you made rather than one you inherited from a template.
On this deal"Liability capped at fees paid in the preceding twelve months, excluding breach of confidentiality, IP infringement and fraud." -
05Write termination as a process, not a switch
For convenience, for cause, a cure period, notice, and what survives. What happens to work in progress and to fees already paid belongs here rather than in an email six months later.
On this deal"For cause with 30 days written notice and a 15-day cure period. Fees for work performed to the termination date remain payable." -
06Read it against itself
The most common defect in a real contract is not a missing clause, it is two clauses that disagree. Payment says milestones, termination says immediate, acceptance says nothing. Read the whole thing in one sitting looking only for contradictions.
On this dealIf payment is on acceptance and acceptance has no deadline, you have written an invoice that may never become due. -
07Have the standard reviewed once, then generate against it
This is where the leverage is. A lawyer reviewing your standard agreement once costs a fraction of reviewing thirty deals, and every document after that starts from reviewed wording.
On this dealImport the reviewed version and it becomes the template every generated contract is built from.
Four sentences, before and after.
Each of these is a line that appears in real documents, and the reason it fails.
The Supplier shall provide the Services in a professional manner.
The Supplier shall deliver the deliverables listed in Schedule 1 to the acceptance criteria in Schedule 2.
"Professional manner" cannot be tested. A pointer to named deliverables and criteria can.
Either party may terminate this agreement at any time.
Either party may terminate for convenience on 30 days written notice. Fees for work performed to the termination date remain payable, and clauses 8, 9 and 12 survive.
The first lets a client walk mid-phase owing nothing. The second gives notice, payment and survival, which is what you actually meant.
Payment due upon completion.
Payment due 45 days after acceptance of each phase, acceptance being deemed after 10 business days absent written rejection.
"Completion" has no definition and no deadline, so the invoice has no trigger.
The four common ways this goes wrong.
- Clauses that contradict each other
- Far more common than missing clauses, and much harder to spot, because each clause reads fine on its own.
- Undefined acceptance
- Without it, "done" is whatever the other side says it is, and the final payment is at their discretion.
- Inherited liability terms
- A cap copied from a template written for a different size of deal is a number nobody chose.
- Novel terms, unreviewed
- Drafting something unusual for an unusual situation and signing it without advice is the one genuinely dangerous thing on this page.
When to stop and call a lawyer
Generating a standard agreement is reasonable. These five situations are not, and the cost of advice is small against what is at stake in each.
| Uncapped or unusual liability | Get advice. The number is the whole risk. |
|---|---|
| IP assignment of anything significant | Get advice. It is permanent. |
| A regulated sector or personal data at scale | Get advice. The rules are not in the contract. |
| Cross-border, or an unfamiliar jurisdiction | Get advice. Enforceability varies. |
| Anything you have not sent before | Get the standard reviewed once, then reuse it. |
Straight answers.
Can I write a contract without a lawyer?
You can draft one, and for routine commercial work most people do. The sensible pattern is to build one standard agreement, have a lawyer review it once, and generate against it from then on. What is genuinely risky is drafting novel terms for an unusual situation and signing them unreviewed.
What makes a contract legally binding?
An offer, acceptance, consideration, an intention to be bound, and capacity to contract. Signing electronically does not weaken any of that: under the ESIGN Act and eIDAS an electronic signature is enforceable provided intent and consent are clear and the signature is associated with the specific record.
What are the most important clauses?
Scope, payment, liability and termination. Everything else either supports those four or is boilerplate. If your review time is limited, spend it there.
Can AI write a contract?
It can draft one in seconds from a description of the deal, and signing it electronically is binding. What it cannot do is tell you the terms suit your circumstances, which is legal advice. Use it to produce the document, and use a lawyer once to approve the standard it produces.