Birth of Contract Templates
Contracts are subjective to a specific selling party or parties and a specific buying party or parties. However, certain industries use the same format for contracts repeatedly. An example is a real estate transaction. The buyer is a unique name(s), as well as the seller. While the property address is unique from contract to contract, the terms are likely the same from one house purchase to another, or from one office lease to another. This is how the birth of contract templates occurred.
Contract templates are made with an intention/use in mind. Templates are created to serve one specific use. For example, a real estate house purchase contract is created from a different contract template than a non-compete contract or an employment contract. Neither a non-compete contract nor an employment contract could be used to create a real estate house purchase contract. Each of these types of contracts has some standard language and some unique language.
Templates are comprised of the standard language, unique language, and clauses. Clauses are the section headings of a contract.
Contract clauses are subjective to each template. In the real estate transaction example, common clauses in a real estate contract template include:
- Appraised value
- Contingency offers
- Building permits
In contrast, common clauses in a non-compete contract template include:
- Effective date
- Expiry date
- Geographic area
- An individual’s name
Contracts can be written or verbal. However, proving a verbal contract is difficult. Katzlawgroup.com states that to enforce a contract, the court must be able to know and understand the essential terms of the agreement. Thus, written contracts are the usual contract method used in transactions.
The three elements of a contract include:
- An offer
- Acceptance of the offer
- Consideration – something given from each party to the other party
Contract Life Cycle Scenario
Actors in this scenario:
- Buyers – Betty and Brian
- Sellers – Sally and Steve
- Contract provided by real estate agent – Randy
Betty and Brian are married and shopping for a house to buy. Betty and Brian find the house that they want to buy after viewing multiple properties with a real estate agent, Randy. The house for sale is currently owned by Sally and Steve, who were relocated by their jobs to another state. The buyers, Betty and Brian make an offer to the sellers, Sally and Steve. The offer is put into written form on a buyer’s contract, prepared by Randy’s real estate brokerage firm. This is not the first, nor the last, buyer’s contract that Randy’s real estate brokerage firm has used or will use. Randy uses fixed content from a contract template to create the buyer’s contract for Betty and Brian.
Randy accesses the contract template options at his brokerage office. He chooses the template for residential real estate transaction. Randy enters the unique language that is subjective to this one scenario of Betty and Brian buying Sally and Steve’s house. Randy saves the subjective contract with a new file name in a contract management system, which is a software that stores, tracks, and manages all active, pending, and past contracts for an organization.
When Betty and Brian’s offer is made, their signatures can be added digitally within the contract management system. Likewise, when Sally and Steve accept the offer, their signatures can also be added digitally. All parties will receive copies of each contract edit (including eSignature, negotiations, etc.).
Contract templates save time and resources. Instead of creating a unique contract for every scenario with the same transaction, a template can be used for the standard language. Then, each contract template can be made to be subjective to a transaction when unique language is entered throughout each pertinent contract clause.
To learn more about a contract management system or to see a free demo, click here.