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A simple contract
People enter into contracts almost every day of their lives. These are sometimes written, but most times they are oral. A simple contract is an agreement between two parties where one party agrees to do something for a price paid by the other and they intend that agreement to be legally binding.
This week we consider the requirements for a simple contract between two parties, such as when you hire someone to do some building work at your home. You should always seek to have the terms of your agreement in writing. A contract does not always have to be done by a lawyer, but it is advisable to consult one, especially if it involves a significant amount of money. A building contract should include:
• The names and addresses of the parties
• The scope of work to be done. For example, if the agreement is for the laying of tiles, it should state what exactly the person is being hired to do.
Does it include the preparation of the floor, the filling of grout and the cleaning up afterwards?
• The price for the work (labour cost.)
• When the payment is due. Is payment to be made at the end or by installments during the job?
• The period over which the work is to be done (start and end dates.)
• Any special terms such as a penalty payable if the work is not completed on time.
Both parties should read the agreement carefully and sign it in each other’s presence. The agreement must also be dated. An eyewitness is also recommended. Two copies of the agreement should be signed and each party should be given one with the original signatures. If there are any changes or scratches both parties should initial the documents. The pages or paragraphs should be numbered so as to prevent any additions.
One advantage of a written agreement is that it can be used to settle any dispute. Also, if the matter has to go to court because one side has not lived up to the bargain, the court can review the agreement to make a decision. The parties are also free to agree to change the terms of the agreement after it has been signed.
Both parties must agree to this. You may, for example, give an extension of time to complete the job. If this is done you should have a further agreement drawn up to state this extension. Again, both parties must sign this new part of the agreement. It is also a good practice to keep all records relating to the job. Receipts, invoices for purchase of materials, estimates and any drawings or sketches made should be safely kept in case a dispute arises.
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