Contract Basics for ParalegalsThe Paralegal Resource
November 7, 2012 — 1,440 views
Contract Basics for Paralegals
The ability to draft various types of agreements and contracts is a necessary skill for paralegals working in many areas of law. Contracts are legally binding agreements between two or more persons or legal entities in which services or goods are provided in exchange for some type of consideration, be it money, goods or services. Contracts outline what is supposed to happen as a result of the contract and set out the consequences if one party does not fulfill its obligations.
There are many different types of business contracts. Some of the more common types include:
· Sale or purchase of business assets
· Sale or purchase of stock
· Shareholder or partnership agreements
· Lease of business premises
· Lease of business equipment
· Employment agreement
Commercial contracts are contracts between a business and its suppliers, customers or distributors. Commercial contracts may set out prices, terms, distribution details, causes for termination, etc. The purpose of commercial contracts is to protect the interests of the business.
Prior to entering into a contract, the parties involved may undergo a period of discussion, negotiation, offers and counter-offers before they come to a mutual agreement concerning the contract terms. During this time the parties may sign a non-binding agreement such as a letter of intent or a memorandum of understanding.
There are some basic elements which need to be included in all legally binding contracts. These include:
· Defining the parties to the contract and their authority to enter into it
· The purpose or subject of the contract
· Each party’s responsibilities and obligations and the dates by which these responsibilities and obligations are to be performed
· Representations and warranties of each party
· The consideration being exchanged, be it money, goods or services and when said consideration is due
· Liability issues
· Signatures of the parties
Having a library of forms from which to draw in drafting a contract is invaluable. These forms will include boilerplate or standard clauses that can be used in many contracts with a minimal amount of revision, thus saving considerable time. Not all clauses will be appropriate in all contracts, so it is important only to include boilerplate language which is applicable to the situation for which the contract is being prepared.
Paralegals can be an important part of the contract process, from the initial meeting between client and attorney to discuss the goal and aim of the contract until the final documents are signed by all of the parties.