How to Make a Contract (with Pictures)

2024 Author: Samantha Chapman | [email protected]. Last modified: 2023-12-17 09:13

If you have to write a contract for goods or services, it is important to protect yourself in order to ensure that the agreement is legitimate and binding. Knowing the elements necessary to create and implement an agreement can help you make an appropriate legal contract and prevent possible risks. Indeed, vagueness and errors can lead to numerous costs in the future, especially in the event of litigation. This article focuses on Italian legislation and was designed to give advice to readers who do not have in-depth legal knowledge. However, it is good to remember that, for the avoidance of doubt, you should always contact a lawyer.

Steps

Part 1 of 5: General Form of a Contract

Step 1. In Italy the contracts are regulated by the Civil Code

In particular, it is article 1325 that defines the requirements that a contract must possess. They are:

• Agreement of the contracting parties. It is possible to reach it only if the subjects declare a total coincidence regarding their will. It can take place through an express or tacit manifestation (in this case we are talking about conclusive behavior).
• Cause, i.e. the purpose for which the contracting parties decide to enter into a contract.
• Object, i.e. the content of the contract, which must be possible, lawful, determined and determinable.
• Form, that is, the means in which the will of the contracting parties is expressed.

Step 2. All contracts have a more or less similar general form, but the specific nature of the agreement and the specific needs of the contracting parties change

Here is a list of some of the most used typical contracts:

• Purchase agreement (Article 1470 of the Civil Code and following);
• Administration contract (Article 1559 of the Civil Code and following);
• Lease agreement for movable or immovable property (Article 1571 of the Civil Code and following);
• Tender contract (art. 1655 of the Civil Code and following);
• Transport contract (Article 1678 of the Civil Code and following);
• Mandate agreement (Article 1703 of the Civil Code and following);
• Agency contract (Article 1742 of the Civil Code and following);
• Mediation contract (Article 1754 of the Civil Code and following);
• Deposit agreement (Article 1766 of the Civil Code and following);
• Loan agreement (Article 1803 of the Civil Code and following);
• Transaction agreement (art. 1965 of the Civil Code and following);
• Work contract (Article 2222 of the Civil Code and following).
• There are also so-called membership contracts, in which the conditions are dictated by only one party (generally a company such as a bank, an insurance company, a telephone operator, or service company such as electricity, water and gas) and the clauses are usually vexatious. The other party adheres only to what has been established.

• In recent years, telematic contracts have also begun to take hold, which can be entered into via e-mail or by accessing a website.

  According to article 1323 of the Civil Code, a contract need not be typical: it can also be atypical. In this case it can contain elements of a typical contract or be totally unique; what matters is the legality of the purpose, which must not be illegal

Step 3. A contract can be expressed in written or oral form

Agreements made by e-mail, fax, telephone or verbally are equally valid. In fact, an agreement concluded informally can still be defined as a contract, provided that the consent regarding the service that will be performed is clear. However, there are types of agreements (such as contracts for the purchase and sale of real estate or subcontracting contracts) which require the written form.

• Of course, a contract drawn up in a traditional form gives room for fewer interpretations and doubts, especially in the event of a dispute. An oral agreement is more problematic in this one devoid of proofs and certainties.
• Be careful with emails. Of course, it is an agreement made in writing, but in reality the e-mail messages have purely verbal value, except when using certified mail.

Step 4. A contract can be modified, but all changes must be made by means of a written document signed by both contracting parties

Step 5. A contract begins on the date the agreement is made, usually affixed before signing

However, it is possible to agree on a different date. The duration of a contract can be for a fixed or indefinite period. In both cases, you can add a contractual clause that establishes whether to renew the agreement upon expiry (if it is for a fixed term) or the procedures for termination (if it is for an indefinite period).

Step 6. According to article 1326 of the Civil Code, "the contract is concluded when the person making the proposal is aware of the acceptance of the other party"

However, acceptance does not need to be expressly expressed. It is in fact possible to conclude a contract also through the direct implementation of the service, or through demonstrative facts. Acceptance must be known to the proposer by the deadline. If it does not correspond to the initial proposal, it is equivalent to a counter-proposal. The real contracts, on the other hand, are concluded with the delivery of the tangible property covered by the agreement.

Step 7. The law does not require registration for all types of contract (for example it is mandatory for property leases), but it is possible to do so in case of use, such as for a dispute

If the contract is registered, it is necessary to have 3 signed original copies: 1 for the registration itself and 2 to be given to the contracting parties

Part 2 of 5: Negotiations

Step 1. Make a valid offer

A legitimate agreement has 3 essential elements: communication, commitment and defined terms. This means that you must communicate the offer in written, oral or otherwise understandable form. The offer must include a commitment to abide by the terms of the agreement, and those terms must be clear and precise.

• For example, you could say to your neighbor: "I would like to sell you a 2010 pleasure boat for € 5,000. If you pay 5 monthly installments of € 1,000, I am willing to accept this form of payment." The offer is made orally, a commitment is made (to give the boat to your neighbor in exchange for money) and the terms are defined (it is established which boat is and the amount to be paid).
• An offer must be considered fair to both parties for it to be valid. We can also speak of a proposal in good faith. Fairness is a sensitive concept in contracts, but in general it is assumed that both parties will not manipulate each other and will not try to modify or break terms through shady tactics or tortuous verbal formulations.

Step 2. Consider the performance

In a contract, the performance indicates the agreement entered into by the contractors as to what they will do or refrain from. It should be fair and equitable.

• For example, if your neighbor decides to buy the boat, his benefit is to give you the money. Yours is to sell the asset in exchange for that sum. In this case, the exchange is fair, as long as the value of the boat is fair for the price being asked.
• A fair offer will not demand conditions that are unlikely or impossible to comply with. For example, you shouldn't require your neighbor to pay you 1000 euros a month in one-euro coins. If your neighbor agrees, it would technically be legal, but that puts an unusual burden on him, and if the contract is challenged at a later time, he may not fulfill the obligation.

Step 3. Negotiate acceptance of the offer

An offer is insignificant on its own, unless it is accepted by the individual to whom it is offered. The latter could accept it directly or change the terms. For most contracts, changing the terms of an offer negates the initial offer and creates a counter offer.

For example, the neighbor might agree to purchase the boat, but would prefer you to accept an installment payment of 500 euros per month for 10 months instead. This does not constitute acceptance of your offer, but a counter offer, and you can decide to accept or decline it

Step 4. Take notes

If you intend to enter into a verbal or oral contract, which is not advised by most lawyers, taking notes when making the agreement will help you if it is subsequently challenged. Another possibility is to conclude the contract in the presence of witnesses.

Taking notes can also help you write the contract. You don't have to rely on your memory to remember the terms, because they will have already been written

Part 3 of 5: Drafting

Step 1. When it comes to drafting a contract, you need to be guided by a simple but essential concept:

clarity. A clear contract will give little room for interpretation and doubt. It is necessary to define everything right away and do it in the most crystalline way possible.

Step 2. Try to have a written contract

In everyday life, it is common for many offers and counter-offers to be oral (except in the real estate sector). However, it is good to have a written agreement. From a legal point of view, you are much more protected, because a written contract is legally binding. An oral contract, legal as it is, is much more difficult to enforce if a party fails to fulfill its obligation.

• Some contracts must necessarily be put in writing. These include contracts relating to land or immovable property, agreements that modify, constitute or transfer the right of usufruct on immovable property, deeds of division of immovable property and other real property rights.
• There is no concrete and irrefutable evidence that proves the validity of a verbal contract. If you and the other party subsequently have a disagreement on the terms of the contract, neither of the 2 will have evidence to prove the legitimacy of their point of view. In court, it is incredibly difficult to make decisions about these agreements. Consequently, all contracts that involve an important obligation, of high economic or temporal value must be written.

Step 3. A contract must be written in a simple and clear way, but you must still use the right legal terminology and avoid synonyms to refer to a precise concept

This little foresight will make the text easier and more fluent. If the agreement concerns a specific sector, technical terms will probably be used: in this case it is good to insert a definition. The most important words should be written in capital letters. As for acronyms and abbreviations, only explain them the first time they appear.

Step 4. Name the contract and indicate the parties involved

The agreement itself should have a title (nothing elaborate, such as "Sales Agreement" or "Service Agreement"). You should also specifically name the parties involved in the agreement, with all the data required by the type of contract used. If you will repeatedly use a contract, you may use representative terms (such as "Buyer" and "Seller") throughout the text, provided that the legal names of the parties are changed at the beginning of the agreement.

• For example, you have a contract to regulate the sale of your boat to your neighbor. You must specify the name of the buyer, Gianni Bianchi, and of the seller, Marco Rossi, at the beginning of the contract.
• If it is a contract to be used on a recurring basis, for example you are a photographer, you can use representative general terms, such as "Photographer" and "Client". In this case, you would use the names Gianni Bianchi (hereinafter referred to as "Photographer") and Marco Rossi (hereinafter referred to as "Client") the first time the contractors are introduced. In the rest of the document, you can use "Photographer" and "Client" in place of specific names.

Step 5. Provide dates and other details

To make sure the contract is as specific as possible, you need to include precise dates. If you want to indicate a deadline, but the events or actions do not have to end in anticipation of an exact date, you can use the word "by" before indicating the deadline.

Step 6. Establish contractual terms

The contract must specify the exact terms of the agreement. If it is an exchange of goods or services, they must be indicated exactly together with the expected exchange material (money, other goods or services).

• You can also provide specific details about what would happen if the expected trade was not fully satisfied. In particular, consider whether there will be any damages or remedies if the agreement is broken. There are different types of damage, appropriate for different situations.
• The penalty clause indicates a sanction that will be implemented in case of breach of the contract. For example, if the neighbor buys your boat but pays one of the installments late, the penalty clause could state that he will have to pay an additional amount of money for each week of delay. You need to be wary of these types of clauses - a court may not enforce what seems exaggerated. As a general rule, it is reasonable to impose a penalty on late payments, but to expect your neighbor to return the boat to you regardless of the amount he has already paid to you will likely be considered excessive.
• The resulting damages represent an indirect result of the contractual infringement. It is often difficult to remedy this.
• If the contract is for a rather expensive or time-consuming good or service, you may want to include a clause to determine that the dispute will be resolved by arbitration or legal action.
• If you sell a boat to your neighbor, you should specify the make, model and year of manufacture of the item, as well as its name (if it has one) and, if possible, the serial number. You should also include the exact amount of euros to be paid and the terms of payment. For example, you could specify that the neighbor will pay you 500 euros monthly for 10 months, until the total is 5000 euros.

Step 7. Number all the pages of the contract and, if it is particularly long and complex, insert an index

Step 8. Review the contract very carefully

Considering the meaning of every single word and every single sentence, leave nothing to chance. In particular, make sure that the text has no contradictions.

Step 9. The contracting parties must sign the contract at the bottom of the page, adding an initials of their name on each additional page

• It may be necessary for a notary (or at least a witness) to be present at the signing of the contract and to sign the contract himself. While not mandatory for your agreement, it may come in handy if one of the parties subsequently claims that the document has been forged or modified.

  Usually witnesses or notaries are required for wills, deeds, mortgages, marriage contracts

Step 10. You can attach documents

A contract serves to deal with the purely legal aspects of an agreement. Consequently, the technical or commercial aspects, price lists or lists of competitors must be separated from the legal part. If the attachments are in a foreign language, it is a good idea to perform a sworn translation into Italian.

Step 11. Many facsimiles of contracts are available on the internet

Of course, these are basic models that must then be customized and integrated with the specific needs of the contractors. A general model does not fully protect, especially in particular cases, so it would be better to contact a lawyer to check that it has been drawn up correctly. In any case, the assistance of a lawyer is not mandatory.

Part 4 of 5: Peculiarities of Some of the Most Used Contracts

Commercial contract

Step 1. Having a contractual standard helps prevent potential problems

A company should in fact turn to experts in legal matters to draft in a standardized way each type of contract used more frequently. This has several advantages, including speeding up negotiations and avoiding various risks.

Step 2. If you intend to enter into a commercial contract with a new partner, it is a good idea to check their position

In fact, it is possible to request a survey from the chamber of commerce in the city where the company has its registered office. If you are unable to make a request in person, you can proceed via the internet. A search allows you to verify various information, including the regular registration of the company, its actual existence, the date of creation, the corporate purpose, representatives and employees.

Make sure the person sent to sign the contract has permission to do so

Step 3. In the case of an international contract, the applicable law in contractual matters is the Rome Convention of 1980-06-19

Unless otherwise specified in the contract, the law of the country with which it has a "closest connection" is applied (Article 4.1 of the Rome Convention). Since it is not always as immediate as it may seem, the contracting parties can choose the applicable law directly.

Lease Agreement for a Real Estate

Step 1. A lease must first of all contain general information, i.e. the date on which it was stipulated, the details of the contracting parties (name and surname / company name, date and place of birth, address of residence / registered office, tax code / VAT number), description of the leased property (address, cadastral data, use), amount of the rent and duration of the lease

The lease also extends to movable property, but in that case the exact term to use is "rental"

Step 2. The form of the lease is free, therefore there is no precise structure

It can even be stipulated orally.

To get a guide, you can download templates from this site (including those for garage rental and tourist rental). However, as has already been recommended in this article, when in doubt it is always good that the writing is supervised by a lawyer

Step 3. Residential leases are divided into 5 categories:

• Ordinary contract with free rent (4 + 4);
• Transitional contract (with a duration between 1 and 18 months);
• Conventioned lease agreement or agreed rent (3 + 2);
• Transitional contract for students (with a duration between 6 and 36 months);
• Loan agreement for use.

Step 4. Lease agreements must be registered (except for exceptions) within 30 days by the landlord or tenant

Registration requires the payment of a registration tax and a stamp duty.

Purchase agreement

Step 1. According to art

1470 of the Civil Code, "the sale is the contract which has as its object the transfer of ownership of a thing or the transfer of another right towards the consideration of a price". The contracting parties to this contract are the seller and the buyer. A sale can involve the transfer of movable or immovable ownership.

• It should not be confused with the preliminary sales contract, a means by which individuals who wish to sell or buy an asset undertake to carry out the operation.

  For example, for the purchase or sale of a property, a preliminary contract is usually made, drawn up by the seller himself, by the real estate agency or by a lawyer. The agreement defines the essential terms of the sale (details of the ownership, data of the contracting parties, purchase price, and so on). It is better to consult a lawyer to make sure that everything is in order

Step 2. It is also possible to sell something that does not exist at the time of stipulation, with the promise that the transfer will be made when the object of the contract becomes real

Step 3. Also in this case the form of the contract is free, among other things the agreement can be stipulated orally or through the concrete implementation of one's obligation

In any case, it must be remembered that for a real estate sale the contract must be written.

A real estate purchase agreement must be stipulated in front of a notary, only in this way will it be possible to proceed with the transcription in the Real Estate Registers, a fundamental step to avoid having trouble in the future

Work contract

Step 1. Employment contracts are agreements made between an employer and a worker

The employee undertakes to offer their skills and professionalism in exchange for a remuneration, or the consideration of the employer.

There are various types of employment contracts: fixed-term or permanent employment, apprenticeship, project-based and so on. On this site you can find different models

Step 2. For it to be valid, both contracting parties must have reached the minimum age to start pursuing a profession

Step 3. The cause of an employment contract is represented by the exchange between an intellectual or manual performance and a remuneration

Step 4. A precise form is not foreseen for the drafting, on the other hand this type of agreement can also be taken verbally or by concluding acts

In some cases, however, a written or otherwise specified form is mandatory.

Part 5 of 5: Termination of the Agreement

Step 1. A contract can be dissolved or terminated for various reasons

In the event of dissolution, the agreement will cease to have any validity.

Step 2. Article 1453 of the Civil Code regulates the termination of the contract, caused by an anomaly in the agreement which appeared unexpectedly

Italian legislation provides for 3 types of resolution:

• Termination for non-fulfillment. It occurs when one of the contracting parties does not perform the services corresponding to it, consequently the non-defaulting party can request that the performance be carried out or that the contract be terminated.
• When drawing up the contract it is possible to intervene to have a guarantee of fulfillment: insert a penalty clause, provide for the payment of a deposit, request the offer of real guarantees (such as movable and immovable property) or other forms of guarantee, such as surety.
• Termination due to unexpected impossibility. It occurs when it becomes impossible to make a performance, and this impossibility can be total or partial.
• Termination due to excessive burdens occurring. Due to extraordinary or unforeseeable circumstances, one of the two parties cannot perform the service corresponding to it.

Step 3. The termination of a contract is regulated by article 1447 and following of the Civil Code

It can occur for 2 reasons (be careful not to confuse it with the resolution):

• Termination of a contract concluded in a state of danger. It occurs when the terms of the agreement are unfair and one of the parties (or another individual) was in a state of danger at the time it was entered into.
• Termination of contract for injury. It occurs when there is a disproportion between the performance of the contracting parties; in general this happens if one party tries to take advantage of the other.

Step 4. A contract can also be terminated for reasons of contractual invalidity, an anomaly divided in turn into nullity and voidability

• According to article 1418 of the Civil Code, a contract can be defined as null when it does not comply with mandatory rules, does not meet the requirements of article 1325 (described in the first section of this guide), is a source of illegality, contains an impossible object, illegal, indeterminate or indeterminable. Avoid fraudulent claims or terms in the contract. Make sure that the requests and conditions mentioned in the agreement are not unlawful. Contracts based on fraudulent premises, whether intentional or unintentional, are not legally binding. For example, you cannot enter into a car purchase agreement with your neighbor if you are not the rightful owner. Claiming that the asset belongs to you when this is not true constitutes fraud, and will completely void the agreement.

  • Don't try to write a contract for an illegal purpose. An agreement is not legal or binding if the goods or services of the agreement do not comply with the law.
  • For example, you cannot enter into a contract that involves the sale of illicit substances, such as drugs.

• Article 1425 and the following, on the other hand, deal with annulment, which occurs when one of the parties is legally unable to sign an agreement, for example because of a minor or unable to understand and want. It can also manifest itself when consent is given by mistake, or extorted. Don't force someone to enter into a contract. An agreement can be canceled if a person is coerced, threatened, or blackmailed into signing it. All contractors must enter into the contract of their own will and knowingly for it to be binding.

  • Make sure all parties have the legal capacity to enter into a contract. To do this, all the contractors must be of age, in full possession of their mental faculties and free of incapacities that preclude the understanding of the content of the agreement.
  • In some cases it is possible that a minor can stipulate a contract through the intervention of an adult, who must co-sign. Furthermore, an emancipated minor can sign an agreement.
  • Being in full possession of their mental faculties at the time of entering into a contract means that a person cannot be obliged to legally abide by an agreement if they are under the influence of drugs or are otherwise unable to sign.

  Advice

  • Online you can find templates for different types of contracts. Do a Google search according to your needs. Most agreements, such as rental agreements, need to be prepared according to specific guidelines, so make sure you are aware of the legal requirements.
  • When signing a contract, contractors should sign all necessary copies for each individual to keep an original copy.
  • Make sure the contract is clear about the work to be done, the loan repayment terms, the item for sale, or the compensation that will be provided. An agreement does not have to be drawn up or expressed in legal words for it to be considered legally binding. It just needs to clearly describe the terms of the agreement, identify the contractors and be signed by the individuals who will be responsible for fulfilling the conditions.
  • Until an offer is accepted, the person who made it, called the bidder, could revoke or modify it.