Writing contracts - how agreements work

What an agreement is

An agreement is an arrangement between two or more parties and can also mean the actual document where the agreement is written down.

Offer + acceptance = agreement

The basic model for how an agreement is entered into is regulated in the Contracts Act. For an agreement to come about, three things are required:

• an offer (a bid, a tender)
• an acceptance (an answer)
• that the content of offer and acceptance is exactly the same.

If all three of these conditions are satisfied, an agreement can been entered into.

Reasons to make an agreement

There are several reasons to make an agreement. One example might be that you are about to buy real estate. But also when you buy a newspaper or take a bus ride, you make an agreement. When you run a business you may need employment contracts if you have employees.

Employment contract and content of the contract

An agreement can be very simply written, for example a receipt, and it can be very complex, perhaps several hundred pages long. Regarding buying real estate or other property, only written agreements are valid.

The main rule is that everyone is free to enter into agreements and that agreements must be kept. That is why you can be held liable if you do not keep an agreement.

Written contract

The purpose of a written contract is for the parties to write down what they have agreed. Verbal contracts are valid, but it may be difficult to prove what has been agreed.

Anyone making a claim must be able to prove it. So, it is much better to have a short written contract than no written contract at all. If the other party does not want to write a contract, you should still write down what you have agreed and send it to the other party by email or some other means. Ask the other party to confirm what is written or to let you know if something is incorrect. Do this before the cooperation starts. Any documentation can be used later to clarify what was agreed between you.

If you are not used to writing contracts, remember that it should have answers to the most important questions:

• what
• who
• when
• where
• how
• and at what price.

To write a contract

Standard contracts

In most sectors, there are standard contracts. Find out whether the contract has been negotiated between representatives of different interests or whether it has been unilaterally drawn up by your counterparty. It is also possible to make additions and amendments to standard contracts.

Before you sign

Do not be afraid to ask what different clauses mean. If you are not sure about wording in a contract, it is a good idea to ask the other party to confirm that you both interpret the wording the same way before you sign the contract.

Authorised signatory

When you enter into a contract with a company, it is important check that an authorised signatory is signing the contract. You can contact the Swedish Companies Registration Office to check who the authorised signatory is for a particular company.

Check the authorised signatory at the Swedish Companies Registration Office

Annexes and references

If there are annexes to the contract, there should always be clear references inside the contract. The same applies if you reference public documents or data, such as base amounts or consumer price indices. Indicate the order in which the annexes apply, as there may be conflicting information in the various annexes and in the text of the contract that you may not have noticed.

Additions and amendments

It is always possible to make a new agreement or to make changes (amendments) to a previous contract, if both parties agree. Be sure to document any changes to the contract. Failure to do so is a common reason for disputes between the parties. When you make changes or supplementary agreements, they should also be in writing. It may be enough to send an email asking the other party to confirm the change. Make sure that the supplementary clauses do not inadvertently conflict with the main contract. Clearly state which contract you are amending or whether the old contract will be made null and void.

If a dispute arises

If the parties to a contract disagree and cannot reach an agreement, the dispute can be brought before the courts.

If a dispute arises

Legal advice

If you are unsure, it is a good idea to seek legal advice before signing the contract. By getting help to ensure that you are really in agreement, the collaboration will run more smoothly. It is cheaper to get help and a good contract from the start than to go through lengthy and costly litigation later. This is particularly important if you are drafting a contract that you are not familiar with or a contract of major importance.