How to draft a contract: structure and required sections

How to draft a contract without legal risk

How to draft a contract from scratch: fix the parties, the subject, payment, deadlines, and liability, then assemble the sections into a working structure. Below is how to draft a contract step by step, and which wording to use so the text works in your favor. Drafting a contract from scratch without grabbing a template at random is easier if you start from a brief of the deal, not from someone else’s sample.

Contract builder: order of sections

Basic principles of drafting a contract

1. Identifying the parties

The first and most important step is to identify the parties to the contract clearly. State the full names of legal entities or the full names of individuals, and their details (INN, OGRN, addresses, contact data). That helps avoid confusion and problems when the contract is performed.

2. Subject of the contract

The subject of the contract should be described in as much detail and as specifically as possible. If it is a work contract, state exactly which work will be done. If it is a supply contract, describe the goods with quantity, quality, and characteristics. The more detailed the description, the fewer disputes later.

3. Deadlines and conditions

Always state the deadlines for performing obligations. That can be a specific date or a period of time. It is also important to set the conditions under which the contract is treated as performed, and the procedure for accepting work or goods.

4. Price and payment procedure

The contract price should be stated clearly: a fixed amount or a calculation formula. Set the payment procedure: prepayment, payment after performance, or payment by stages. State the payment deadlines and how funds are transferred. That helps avoid financial disputes.

Required clauses of a contract

Rights and obligations of the parties

This section should be as detailed as possible. Describe what each party must do, by when, and in what scope. Also state the parties’ rights: the right to demand performance, the right to information, and the right to terminate under specified conditions.

Liability of the parties

State what liability applies if the contract terms are breached. That can be fines, late-payment interest, or a contractual penalty. State the amount of liability and how it is applied. Important: liability should be mutual and fair.

Terms for terminating the contract

Decide in advance the conditions under which the contract can be terminated. That can be a missed deadline, a failure to perform, or a change in circumstances. State the termination procedure: notice, deadlines, and the consequences of termination.

Dispute resolution

Decide how disputes will be resolved: through negotiation, mediation, a state commercial (arbitrazh) court, or a court of general jurisdiction. State the applicable law and the place where disputes are heard. That helps avoid long court proceedings.

Which annexes to add to the contract

A solid contract almost always consists of the main text and annexes. If the annexes are not listed in the contract, they are harder to rely on in a dispute.

• A statement of work with measurable criteria for the result
• A schedule or stages of performance
• An estimate or a table of cost by stage
• A form of acceptance certificate
• Rules for exchanging files and for document versioning

Conclusion

A properly drafted contract is an investment in the safety of your deal. Time spent working through every term in detail protects you from possible risks and disputes later. If you have no experience drafting contracts, it is sensible to consult a lawyer or use a specialized service to check contracts.

Once the draft is ready, move to a separate risk check against a checklist: how to check a contract before signing.