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4 Essential Components of A Business Contract

Posted by leslierickson0 on July 1st, 2020

The term “contract” has a special significance both in business as well as legal spheres. Since it lists down the terms of an agreement between two or more entities, it needs to be written down clearly. Sure, you have the option of writing it yourself, but you should understand that even small errors in language may cause grave consequences later. Thus, to do it the right way, you need an attorney experienced in business contract law in Houston to draft a contract with essential components.

Here are some of the essential components that should be included in a business contract:

1. Fundamentals of the contract

To begin with, a contract needs to have all the fundamentals listed down accurately. These include the date of the contract, the duration for which it is valid, and its purpose. It should clearly state the acceptable terms of the contract that would be binding on both the parties. Also, when drafting a business contract, you need to ensure that it is enforced by the law so there are no problems in its compliance if the need arises.

2. Entities & Confidentiality

Irrespective of the type of contract that is being drafted, it needs to mention all the entities in the contract. The contract should have information about the no. of entities in the contract, their roles, and the duties they need to fulfill until the contract is valid. Also, it should have all the terms and/or conditions about the confidentiality of the contract. This means that it should have terms regarding the disclosure, protection of intellectual property, and other details.

3. Payment obligations

One of the most important components of a business contract is the payment obligations that need to be fulfilled by the parties. For instance, in case of an employment contract, the contract needs to list down the salary of the employees in exchange for the no. of hours they work. Similarly, in other instances, the contract needs to list down the amount of the payment to be made and the frequency of those payments.

4. Termination clauses

Finally, a business contract needs to have termination clauses. These would include the no. of years, months or days a contract is valid. Besides, it would also include information about the procedure to be followed if either party wishes to terminate the agreement or contract. Most of the contracts also include information regarding the course of action that is to be taken if there is a breach of contract by any party involved.


If you wish to hire an affordable contract attorney in Houston, you should get in touch with them online.


Author’s Bio- The author is an avid writer. This article is about the essential components of a contract.


Also See: Business Contract, Essential Components, Contract Needs, Written Down, Contract, Business, Needs

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