The Importance of Contract Writing

The Importance of Contract Writing

Writing contracts and asking for a deposit is common across many industries, however often overlooked by performers. While doing business, creating informal relationships may feel like an easier approach or an expression of trust and mutual understanding, but they only leave you with unnecessary risk and even threaten to destroy business relationships in the absence of clear and agreed upon terms.

Drafting and negotiating clear and well-prepared contracts can provide clarity to discrepancies and help you prevent misunderstandings that can lead to lost time, money, and value

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⭐What is a contract?⭐

A contract is a legally binding promise made between at least 2 parties in order to fulfil an obligation in exchange for something of value. Contracts can either be written, oral, or a combination of both.

⭐Why enter into a contract?⭐

Contracts ensure that your interests are protected by law and that both parties will fulfil their obligations as promised. If a party breaks the contract, there will be certain solutions available to the parties (known as ‘remedies’).

Where possible, it is best to write a contract down. If the parties disagree on the terms of the contract or they are unclear, it will be up to a court to decide what those terms meant. The court will then have to look at how the services, promises, and exchanges were carried out in order to identify the parties’ intentions.

Key Elements of a Contract

For a contract to be valid, it must have four key elements:

⭐ agreement
⭐ capacity
⭐ consideration
⭐ intention

Agreement

For an agreement to be valid, there must be an offer and an acceptance.

Offer:

An agreement happens when an offer is made by 1 party (eg an offer of employment) to the other, and that offer is accepted. An offer is a statement of terms which the person making the offer is prepared to be contractually bound to. An offer is different from an invitation to treat which only invites someone to make an offer, and is not intended to be contractually binding. For example, advertisements, catalogues and brochures where prices of a product are listed are not offers but invitations to treat. If they were, then the advertiser would have to provide everyone who ‘accepted’ them with the product regardless of stock levels.

Acceptance:

Acceptance of the offer must be unconditional (eg a signature on a contract of employment) and it must be communicated. Any negotiations between the parties are counter-offers, not acceptance.

Staying silent is not generally considered acceptance, unless it is clear that acceptance was intended (eg by way of conduct, like paying for a product). What constitutes adequate acceptance will vary depending on the type of contract.

Capacity:

All parties must have the ability to understand the terms of and any obligations under the contract. Also, consent to the contract must be freely given (eg there cannot be any coercion/force, fraud, undue influence, or misrepresentation).

These type of people generally lack the capacity to enter into contracts:

⭐children under 18 – unless the contract is for necessities (food and clothing) or education (an apprenticeship or employment contract) and the terms are fair and benefit the child

⭐people suffering from mental health conditions or under the influence of drugs and/or alcohol – only if the condition affects the person’s ability to understand the nature of the transaction or if the other party is aware of their incapacity

If a person lacking capacity has entered into a contract, it will generally be up to that person to decide if they want to invalidate the contract.

Consideration:

Parties must exchange some value for a contract to be binding. This is called consideration. Consideration does not have to be adequate or for the benefit of the other person, it merely has to be sufficient (eg if someone offers to sell their house for nothing, there is no consideration; but if they offer to sell it for £1, then there is valid consideration).

Examples of insufficient consideration include:

⭐an existing public duty (eg a police officer’s duty to protect the public) or contractual duty (eg the production of services already required by another contract)

⭐something with sentimental value only

⭐something that occurred before the contract – consideration must move from the contract (eg a gift received in January cannot be consideration for a contract entered into in October)

⭐anything illegal

Intention

Not all agreements between parties are contracts. It must be clear that the parties intended to enter into a legally binding contract. In the case of business agreements, the general assumption is that the parties intended to enter into a contract.

In social situations, there is generally no intention for agreements to become legally binding contracts (eg friends deciding to meet at a specific time would not constitute a valid contract). It is up to the person who wants the agreement to be a contract to prove that the parties actually intended to enter into a legally binding contract

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The Performer’s Guide to Contract Writing is now on available on Teachable! Don’t go another gig without the proper contracts you need to succeed! Learn what a contract is, elements of a contract, types of contracts, and commonly used contract templates to use for you own performance business.

Course Curriculum:

  • What is a Contract?
  • Client Contract
  • Independent Contractor
  • Non Competition Agreement 
  • Non Exclusive Agreement
  • Release of Liability
  • General Waiver
  • TFP Contract
  • Tech Rider 

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