Understanding and Writing Contracts and Memoranda of Agreement

What are contracts and memoranda of agreement? Contract It is a statement of an agreement between or among two or more parties that involves an "exchange of value." Memorandum of agreement It is not a legal document, but the signers are showing that they don't intend to try to enforce its terms. Gray areas If one party takes a loss If a particular exchange has become customary

When might you use each document? Use a contract or subcontract: Whenever money is involved. Situations involving a non-money exchange. Use a memorandum of agreement: To define a relationship between organizations. To agree to affiliate in a particular way. To agree to share something. To agree to work together in specific ways.

How do you read and understand a memorandum of agreement? Read every word carefully. Ask for clarification or help. Be sure you agree with all the conditions of the memorandum of agreement before you sign it. Raise any questions before you sign.

How do you draft a contract? Explain who the parties to the contract are, and the time period that the contract covers Explain as specifically as possible every aspect of the contract: what, who, how, when and where If there's money involved, explain the details of payment. Explain any other obligations of each party. Explain how the contractor's performance will be evaluated. Explain the consequences if either party fails to deliver on what it has agreed to. Explain the conditions under which the contract can be ended or "terminated ". Explain the conditions under which the contract can be changed or "amended ". When you've finished, show the contract to others to review your intentions and specifications. Finally, give the contract to the contractor, and be prepared to negotiate some parts of it.

How do you draft a memorandum of agreement? The more everything is spelled out, the less confusion about what you're agreeing to. Being specific helps to avoid misunderstandings, which can escalate into bad feelings and enmity where there was originally trust and collaboration. Clarity in an agreement provides an outline for your work or activity. A clear agreement reflects the clarity of everyone's expectations.