Content of the contract

Title of the contract

The title of the contract is less important than its content, but the title can give an indication of what the parties intended the contract to be, for example, transfer, lease or grant of usage rights.

The preamble or purpose

It is a good idea to start by writing a little about the background and purpose of the contract. What did the parties intend to achieve with the contract? This makes it easier for outsiders (such as a court) to understand the different parts of the contract.

The parties

It is important to state who the parties to the contract are, even though this may sometimes seem obvious. Are the people negotiating the terms of the contract the ones who will be entering into it, or are they doing so as representatives of a company+ Are there parties other than those present when you sign it? Always give the correct name, address, company registration number and personal identity number.

Definitions and interpretation of the contract

If there is a term used repeatedly in the contract that needs to be specified, it is a good idea to do so at the beginning of the contract. Here you can also include things like whether previous versions of the contract are still valid or whether they will cease to be valid. If the parties have multiple collaborations, you can specify whether or not they will be affected by the new contract.

The object of the contract

What are you contracting about? Describe the object (good or service) as precisely as possible. If it is a grant of usage rights, it is useful to specify whether it is exclusive or whether the seller also has the right to contract the same thing with others. It may also be useful to specify the geographical area covered by the contract, for example Sweden or Europe.

Place and date

If the contract is for products or services, it is useful to specify the date of delivery.

Other terms and conditions

Who is responsible for transport, insurance, marketing and so on? Try to think of everything that is relevant to your ability to carry out the contract and agree who does what. What are the responsibilities and powers of the parties?

Price

There are many variations on pricing. Should payment be made at a fixed price? Or should the price vary depending on sales? Can there be a profit to be allocated in some other way? And how should any losses be covered and shared? The price can also be calculated per hour or per week. If variable remuneration is to apply, there may be a maximum amount.

Payment

When and how should payment be made? Is it after the goods or services have been delivered, or in advance? How should it be invoiced, progressively (on a running basis) or all at once?

Delays in payment

What should happen in the event of non-payment or late payment? In such cases, can the seller make any claims on the buyer? Will the buyer have to pay penalty interest? Should the seller have the right to cancel the contract?

Payment reminders and penalty interest

Late delivery of goods or services

What happens if the goods or services are delayed or do not arrive at all? Should the buyer be entitled to compensation (damages)? How much? How should the damages be calculated – per day, week, month or otherwise – and should there be a maximum limit, for example 15 percent of the contract sum? Should the buyer have the right to cancel the contract? If so, when – after one week, five weeks or after 15 weeks of delay?

Defects in the goods or service

What should happen if the goods or services do not turn out as the buyer expected? Should the seller rectify the defect or does the buyer have the right to cancel the contract immediately? Try to think about what might go wrong and what you can do about it. There are many possibilities, and they should be set out in the contract. It is also important to agree on when performance can be considered to have taken place.

Contract duration and termination

Always state how long the contract will be in force, for example from a certain date to a certain date, or from the time the contract is signed by the parties and for a fixed period of time. It is also a good idea to specify whether the contract can be terminated (without being in breach of contract) after a certain period of notice.

Liability in exceptional circumstances

Contracts usually contain a so-called disclaimer for what is often called Force Majeure or Act of God, i.e. forest fires, earthquakes, wars, strikes and major accidents. It is important to regulate whether one or both parties do not have to fulfil their undertaking in such events.

Disputes

If a dispute arises, it is always best to try to reach an agreement; resolving the dispute in court or arbitration can be costly and is often a lengthy process. However, it is also possible to stipulate mediation, settlement documents or other alternative dispute resolution methods in the contract.

Clauses providing for arbitration of disputes are mainly found in business-to-business contracts. Arbitration is very expensive, but it is also quicker and usually more discreet than ordinary court proceedings. If you do not add dispute stipulations in your contract, any disputes will be settled in general court, i.e. the district court, the court of appeal and ultimately the Supreme Court.

In international contracts, you should stipulate in the contract which country and which country's laws will apply in the event of a dispute.

Writing contracts
If a dispute arises

Signature and contract originals

Produce as many originals of the contract as there are parties. Indicate the place and date when the contract is signed by the parties. This may be important in the event of a dispute. When all the parties have signed all the originals, each takes a copy.