Simple Contract Agreements: A Beginner’s Guide (2024)

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Do you have a business and need to know more about contract agreements? Then, you’ve come to the right place.

Contracts are essential for any company, large or small. They offer protection for both parties involved.

Contracts establish terms of agreement and provide security from potential legal actions. Sadly, 30 percent of companies have reported contract disputes for the past three years.

All the more, you need to have a system in place — like a contract management platform — while handling contracts. This article will walk you through the fundamentals of contracts and the key elements you need to know.

What Is a Simple Contract Agreement?

A simple contract agreement is a legally binding document that outlines the terms and conditions of an agreement between two or more parties. It establishes the rights and obligations of each party to the agreement.

A contract agreement provides a clear framework for resolving any disputes in the future.

In general, a simple contract agreement will include the following:

  • Description of the parties involved
  • Stipulations and provisions agreed upon by the parties
  • Any conditions or limitations that may apply
  • Specification of a timeframe for the agreement
  • Any payment arrangements or other financial considerations
  • Details on how the agreement can be terminated or amended

A simple contract agreement doesn’t need to be complicated or lengthy to be legally binding. As long as the fundamental elements exist, parties can enter into a valid contract. But there are also exemptions to this rule.

If your agreement involves complex legal or financial issues, seeking professional legal advice is highly recommended.

Basic Elements of a Simple Contract

Take a closer look at the four fundamental elements of a simple contract: offer, acceptance, consideration, and legality.


This first element refers to an invitation to enter into a contract. It can be a promise, a proposal, or a commitment made by one party to another. An offer must be clear, definite, and communicated to the other party.

For example, a business may offer a particular product or service to a customer in exchange for payment. In this case, the offer would outline the terms, the price, and other relevant details.


Acceptance is the agreement of the second party to the terms of the offer. Once an offer is made, the other party can accept or decline the offer. Acceptance can be in writing or in verbal form that demonstrates acceptance.
Say a customer places an order and pays for a product. Accepting the offer of the seller or business is considered valid.


Consideration refers to the exchange of something of value between the parties. This can be money, goods, services, or promises to perform specific actions. Consideration is essential in a contract because it establishes both parties’ mutual benefit or advantage.

Say business provides a service to a customer in exchange for payment. Both parties receive something of value and a mutual benefit.


Legality ensures that the contract is enforceable by law. A contract must not violate any laws or regulations related to fraud, misrepresentation, or undue influence.

Contracts involving illegal activities, such as selling illegal drugs or hiring an assassin, are considered void and unenforceable. Both parties must ensure that their contract is legal to avoid legal repercussions or penalties.

In summary, an offer, acceptance, consideration, and legality are the building blocks of a simple contract. You must carefully consider the provisions of each element to ensure a mutual understanding and a legally binding agreement.

Different Types of Simple Business Contracts

In the business world, it is essential to ensure that transactional agreements are in place to protect both parties. Here are simple business contracts often used in any industry.

Sales contracts

Sales contracts govern the sale of goods or services. Usually, the agreement outlines:

  • Details of the product being sold
  • Price
  • Quality and quantity
  • Warranties and guarantees

Say a company buys a new computer system from an electronics store. The sales contract outlines the technical specifications of the system, the delivery schedule, and expected payment terms.

Service agreements

Service agreements detail the terms, scope, and conditions of the provider’s specific service. This simple business contract is valuable for professional services like consulting, landscaping, or cleaning.

For example, a cleaning service company may contract clients to clean their offices regularly. The service agreement will cover cleaning frequency, areas of the office to be cleaned, compensation, and the contract duration.

Employment contracts

They define the terms and conditions of an employment relationship between the employer and the employee. It enshrines both parties’ responsibilities and the employment terms like:

  • Compensation
  • Benefits
  • Job description
  • Termination/renewal of contract

For instance, if a construction company hires a new engineer, an employment contract would outline the salary, benefits, working hours, and the nature of the work the latter needs to fulfill.

In conclusion, simple business contracts are indispensable in protecting and managing business transactions. They also establish business relationships and determine the performance and risk parameters for the transaction.

7 Best Practices When Drafting Simple Agreements

When drafting simple agreements, there are certain best practices that every business owner and entrepreneur should follow.

1. Start with a clear statement of purpose

Clearly outline the goals and objectives of the agreement and the responsibilities of each party involved. Suppose you’re hiring an independent contractor to complete a project for your business. Your statement of purpose should define the work’s scope, the completion timeline, and the payment terms.

2. Define key terms and definitions

Define key terms and definitions in your agreements to avoid confusion and misunderstandings. This can include things like payment terms, deadlines, and performance metrics. Say you’re entering into a lease agreement for office space. Elaborate on the terms of rent, security deposit, and maintenance responsibilities.

3. Use clear and concise language

This helps prevent misunderstandings and disputes. Avoid using overly technical jargon or legalistic language that may be difficult for non-experts to understand. Instead, use simple, straightforward language that communicates your intentions.

4. Include dispute resolution provisions

Disputes may arise in any business agreement, so always include mediation or arbitration clauses when drafting contracts. Avoid expensive and time-consuming litigation. For example, you might include a dispute resolution if you enter into a partnership agreement with another business owner.

5. Consider the potential consequences of the breach

Ensure that your contracts are enforceable. You must have a clear course of action if the other party fails to meet their obligations. Suppose you’re entering into a contract to purchase goods from a supplier. Include provisions for damages or cancellation if the supplier fails to deliver on time.

6. Include termination and renewal provisions

These provisions should outline the circumstances in which the agreement can be terminated or renewed. They may also cover any penalties or fees associated with each. Suppose you’re entering into a contract with a marketing agency. Consider including provisions for termination if the agency fails to meet performance metrics or deadlines.

7. Use a standard contract template

Instead of drafting from scratch, explore tools that can help you expedite the process. Contract management systems offer editable templates to ensure your contracts are legally binding and enforceable. You can find a wide range of contract templates online. Work with a lawyer to create a custom template that meets your needs.

Always consult with legal or business experts before signing the dotted line. Check that your contracts are valid and enforceable.

Easily Create Simple Contract Agreements With Fill

Contracts are essential to ensuring that your business runs smoothly. But dealing with legal procedures can be daunting, especially if you’re not a legal expert.

This is why you need Fill, the platform that lets you easily create simple contract agreements. Check out what you can do with this powerful tool.

  • Intuitive interface: With Fill, you don’t need any legal expertise or complicated software to create a contract. Our platform has a user-friendly drag-and-drop interface that allows you to complete a contract in minutes.
  • Customizable templates: Every business is unique, so we offer customizable templates. Simply choose the template that best suits your needs and customize it to fit your situation.
  • Secure storage: Once you’ve created your contract, the last thing you want is to lose it. Fill provides secure storage, ensuring that your contracts are safe and accessible at any time.
  • eSignature functionality: You don’t need to print, sign, and scan documents back and forth. Fill’s electronic signature function allows all parties to sign documents digitally from anywhere in the world. It makes the contract signing process faster and more efficient.

By using Fill, you can save time, money, and hassle. No longer must you deal with lawyers, complicated software, or expensive options. Focus on what you do best – running your business and expanding it further.

Sign up for a free account today and start creating simple contract agreements. 

Krisette Lim

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