How to prepare a business contract

Written by ivy liu
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How to prepare a business contract
Drawing up a business contract (contract 20309 image by pablo from

Trying to make a business contract? To close the deal, you'll need a legal business contract in writing between the parties.

Skill level:


  1. 1

    Summarise the basic terms of your agreement in writing. Before making a business contract, you'll need final agreement on all the terms. If possible, confirm these terms with the other party by e-mail.

  2. 2

    Find samples of the relevant business contract online. Depending on the type of business contract, there may be existing templates online. Modify these business contract templates to suit your needs and specific terms.

  3. 3

    Draft a business contract using a sample agreement from Step 2 or create your own new contract using clear language. If you have a simple business contract, you may not need a sample agreement--it may be easier to make your own as a letter agreement that is signed by all parties.

  4. 4

    Include all terms and specific agreements within your business contract. Read the contract. Confirm that you have written about the who, what, when, where, why and how regarding the terms of the deal.

  5. 5

    Consider "what if" scenarios. Check that you have accounted for non-performance, lateness and default. Discuss any changes or new terms with the other party if applicable.

  6. 6

    Send the contract to your attorney for review for a large business deal. For big investments such as a house or investment purchase, it's best to work with an attorney to ensure that your contract complies with the law.

  7. 7

    Send two originals to the other party with a short cover letter. All parties should initial each page of the agreement and sign and date the last page. Follow up to get the signed contract back quickly. After the other party has initialled and signed the contracts, sign them and send one original back for the other party's records.

Tips and warnings

  • Regulation varies by state on many business and real estate laws, so confirm that your contract terms are legal through research or by consulting an attorney. Avoid or minimise problems by addressing in writing all potential issues and resolutions in detail. Create a simple business contract that covers your agreement terms clearly and accounts for possible deviations from the plan.
  • Have the other party sign the business contract first, then sign and send back an original. This allows you to have more control over the deal and prevents you from having an open agreement with your signature out there. Should circumstances change within the week, you have the right to not sign the contract so you'll have more time and less risk.

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