Legal Drafting and Contract Writing for HR
TransWISH Indonesia successfully conducts Legal Drafting and Contract Writing Training earlier this month of May. Just Like our Professional Finance Admin Training earlier, this training was followed by our client, a well known lighting production company in Indonesia established for decades now.
Trainer for this training is our trainer Mr. Tatang S. Training conducted from May 8-9th 2018 at TransWISH Learning Center, South Jakarta. Mr. Tatang’s class is a serious and fun class.
You can check some of the training documentations here
Why Training Legal Drafting and Contract Writing ?
Almost every business, legal, corporate or personal affair will require an agreement or contract as a basic corridor that will determine the rights, obligations and authorities of the parties involved. The agreement or contract is valid as the law for the parties making it and the third party shall respect it, so important is the contract or agreement it is time for business actors, employees, and you who are often involved in business and organization to know in depth.
The establishment of a correct agreement / contract in both the form and in its contents, and the fulfillment of both material and formal conditions, will enable the parties to ensure that their rights are legally well protected. And if any problem arises will be easily resolved or returned according to rights and obligations proportionally.
Thus to get an idea of the fulfillment of provisions relating to legal aspects in a contract involving parties outside the company, an optimal planning and knowledge of the legal aspects of a contract are required.
Key Considerations on Writing Business Contract
There are many considerations when writing contract. Here are some tips from Findlaw :
A contract is simply a legally enforceable promise. There’s a party who makes an offer, another party who accepts the offer; and as long as something of value is exchanged, a court will enforce the contract in most cases. When deciding how to write a business contract, you want to make sure that all of these elements are present, so that if there’s any dispute a court will find that there is a valid contract that it can enforce.
Although it’s not always required, it is always a good idea to get any contract in writing, especially when it comes to business. Memories are notoriously fickle and people miss remember contract terms all the time. Also, if one party doesn’t want to honor a contract, proving to a court the contract terms becomes an exercise in “he said, she said.”
Write a Business Contract: Know the Basics
When writing a business contract, keep in mind these basic elements:
- Intent to make a contract by both parties
- A legal subject matter (you can’t make a valid contract about something that’s illegal)
- An offer made by one party
- Acceptance of the offer by the other party
- An exchange of something of value (called “consideration” in legalese)
- For certain subject matter, a contract is required to be in writing
There may be further legal requirements depending on the state you live in and the subject matter of the contract, but if you keep the above requirements in mind when writing a business contract, you’ll be on the right track.
Offer and Acceptance
For all contracts there must be at least two parties. One party makes an offer and the other party accepts it. For example, your mechanic calls you and tells you he can replace your muffler for $300. If you say yes, you’ve accepted his offer. If you tell him you need a day to think about it, there has been no acceptance and therefore no valid contract has been made.
Length of Time an Offer Stays Open
When an offer is made, the person making the offer isn’t expected to keep it open forever. On the other hand, offers don’t expire just because they’re not immediately accepted. They stay open for as long as the offer states; and in the absence of such a date, they stay open for a “reasonable” amount of time. A reasonable time takes into account factors such as the industry you’re in, the subject of the contract, and past dealings between the parties. “Reasonable” leaves much room for interpretation, of course, so the smartest course of action is to include an expiration date on an offer.
For example, if you’re a clothing retailer and a manufacturer offers to send you a shipment of clothes, that offer may stay open for several weeks or even months, according to industry standards. However, waiting a year to accept the offer and then expecting the manufacturer to honor the offer isn’t a good idea because the offer will likely be found to have lapsed.
Revoking an Offer You’ve Made
If you’ve made an offer to someone but they haven’t responded, you have the right to revoke your offer any time before the other person accepts the offer. Once they accept the offer, however, you’re bound by the terms of the agreement, even if you’ve had a change of heart. If you’ve agreed to keep an offer open for a certain time, you cannot revoke the offer until that period has ended.
Rejections and Counteroffers
A rejection is simple — one party makes an offer and the other party simply declines it. Another form of rejection is the counteroffer, which is the hallmark of haggling and bargaining for a better deal. When the other party, instead of accepting, replies with a new term (lower price, more product, etc.), this is a rejection of the original offer and new offer for the original offeror. Now, it’s up to you whether to accept the counteroffer or not.
In the example from above, if you decline the mechanic’s offer to replace your muffler for $300 and instead offer to pay him $250 to do the same service, you’ve rejected the original offer and created a new one. If the mechanic agrees, then you have offer and acceptance, and an exchange of something of value — and therefore a valid contract.
Accepting an Offer
The act of acceptance is typically very straightforward. Someone makes an offer and you agree or don’t agree to the terms. However, depending on the subject matter of the contract, there are different requirements for acceptance. For a contract for the sale of goods (anything tangible), a valid contract requires acceptance of every single term. For a contract for services (mechanics, painters, etc.) there may be reasonable, minor differences between what the parties believe to be the terms of the contract.
Following are different methods by which a party can accept an offer:
- Clearly stating or writing acceptance
- Fully performing based on the offer
- Promising to perform
- Performing improperly based on the offer (someone orders Vaseline from you, and you mistakenly send them grape juice—you’ve accepted the offer and formed a valid contract, though your performance is faulty)
You can choose to include language regarding what constitutes acceptance in your business contract.
An Exchange of Something of Value (“Mutual Consideration”)
For any contract to be valid, there must be an exchange of something of value. Essentially, there must be an exchange of services or goods in any contract. It can be a promise to pay in the future (which is the usual arrangement), or an immediate payment, or a promise to act (or not to act). This is called “consideration” in legal terms. For example, if you offer to sell used books to someone for $40, the consideration is books on one side and money on the other side.
When you write a business contract, more than likely none of the terms will be for anything other than money, goods, or services and you won’t need to worry about the absence of an exchange of things of value. Simply be aware that the requirement exists.
Have an Attorney Review the Contract Before You Commit
When entering into any contract, be sure to include the basic elements noted above. The absence of any of them may be used to attack the validity of a contract, and could result in the loss of time, money, and business. While businesspeople write and sign contracts quite regularly, sometimes it’s important (and even critical) to get the assistance of an attorney. Find a qualified business and commercial law attorney near you.
Have an Attorney Review the Contract Before You Commit
When entering into any contract, be sure to include the basic elements noted above. The absence of any of them may be used to attack the validity of a contract, and could result in the loss of time, money, and business. While business people write and sign contracts quite regularly, sometimes it’s important (and even critical) to get the assistance of an attorney. Find a qualified business and commercial law attorney near you.
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How to Write a Business Contract
Here are 10 tips from FIndlaw to make your business contract fair and better on a win win solution
Entering into a contractual business relationship with another party is a serious task and should only be entered into after giving real thought about the relationship you want. Don’t fall into the trap of entering into agreements haphazardly or with complete trust of the other party. Even if it’s a family member (some would argue especially if it’s a family member), the business contract should protect your own business interests first and to do so you’ll need to familiarize yourself with some guidelines on how to write a business contract.
Generally, you will want to keep two things in mind when entering or writing a business contract:
- Does the agreement address all of the possible situations which may arise? It’s also good to have contingency plans.
- Do the provisions leave too much room for ambiguity? Contract disputes often arise over unclear terms or provisions.
Read below for tips on writing business contracts for your small business.
- Get it in Writing
Anytime you enter into a business contract, you want written proof of the agreement as well as specific terms by which each party is bound. Oral agreements do occur in the small business context, but such agreements are difficult to enforce and people’s memories can be faulty and terms easily misremembered or misinterpreted. The first lesson in How to Write a Business Contract 101 is to always get it in writing.
- Use Language You Can Understand
There’s no need to be intimidated by a false sense that a business contract has to be written in “legalese.” The best contracts, particularly in the small business context, are written in plain English where both parties know exactly what they’re signing and what the provisions mean. Just be sure that the terms you write are specific as to each party’s obligations and the specific remedies that you have in the event that the other party violates the agreement. Also, keep in mind that certain terms have specific meaning in the law.
The easiest way to write a contract is to number and label each paragraph and only include that topic in the paragraph. By segmenting the contract into individual units, it will be more easily understood by the parties (and by a court should it come to that).
- Be Detailed
The rights and obligations of each party should be laid out in specific language that leaves little room for interpretation. If you want delivery on the 15th of each month, use the specific number instead of writing, “mid-month”. If you and the other party agree to a new term or decide to change an existing term in the agreement, be sure to add a written amendment to the contract rather than relying on an oral agreement. A court may or may not accept the oral agreement as part of the contract.
- Include Payment Details
It’s important to specify how payments are to be made. If you want to pay half up front and the other half in equal installments during the life of the contract, state that, as well as the terms under which you will release payment. For example if you contract with someone to paint your business offices, you might want a provision stating that your regular payments are contingent upon a certain number of rooms being painted to your satisfaction. Whenever possible, list dates, requirements and methods of payment (cash, check, credit). Contract disputes often center on money, so you’ll want to be as specific as possible.
- Consider Confidentiality
Often when entering a business contract, the other party will gain access and insight into your business practices and possible trade secrets. If you do not want the other party sharing this information, you should include a clause that binds the other party from disclosing your business information or information included in the contract to other parties.
- Include Language on How to Terminate the Contract
Contracts aren’t meant to last forever. If one party continually misses payments or fails to perform their duties, you want to have a mechanism in place so that you can (relatively) easily terminate the contract. It could be a mutual termination agreement (when the objectives of each side have been met through the contract) or more likely an agreement that either side can terminate if the other side violates a major term of the contract, after giving proper notice of its intent to terminate.
- Consider State Laws Governing the Contract
Contracts can stipulate which state’s laws will govern in the event there’s a dispute. If the other party is located in another state, you should include a clause that states which state laws will govern. If you don’t, and there’s a dispute, there may be a whole other legal argument (which costs more money) about which state’s laws should be applied to the contract. Avoid this headache and agree to it at the inception of the contract, when both parties are agreeable.
- Include Remedies and Attorneys’ Fees
Especially if you believe that it’s more likely that you’ll sue over the contract (as opposed to the other party suing you), you might want to include a clause that awards attorneys’ fees to the winning party. Without this clause, each party will have to pay for their own attorneys.
- Consider a Mediation and Arbitration Clause
In the event of a dispute, it may be advantageous to include a provision that requires the parties enter either mediation or arbitration, or both. Mediation is a voluntary process where both parties try to work out their issues directly, with the help of a neutral third party mediator. Any settlement must be approved by both parties. Arbitration is a more adversarial process where the arbitrator hears both sides’ arguments and makes a decision that both parties must abide by. It’s akin to a trial setting, but the arbitration process is much quicker and cheaper than litigating in court.
- Make Sure Your Contract is Enforceable: Work with a Lawyer
Writing a business contract that protects your interests while balancing your business objectives is critical to your business’ success. But while you should get acquainted with the legal terms and processes for writing a contract, sometimes it’s best to have an attorney review your contract before it takes on the force of law. Get started today and find a small business attorney in your area.
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How TransWISH Indonesia can aid your Legal Drafting and Contract Writing Training Program
As said above, companies may benefit from TQM training since it will Reduce defects, Increase morale, increase customer satisfaction and reduce cost. Practice it carefully in the company and it will grow the company even further.
TransWISH Indonesia can help your Legal Drafting and Contract Writing program by consulting Sessions. This program will make companies assisted by our experienced consultants. Or, to gain insights and awareness to more people, we can do in house training at your premises.
Call your favorite TransWISH Indonesia Training Advisor Now.