In business, even the simplest of arrangements benefit from being set out clearly in writing. A well-drafted contract not only clarifies the terms of the agreement but also reduces the risk of disputes down the line. For small business owners, freelancers, sole traders and even individuals engaging in one-off projects, understanding the basics of contract drafting is crucial.
While complex transactions require bespoke legal advice, many everyday contracts can be created using a straightforward format. This article outlines the key steps to drafting a simple contract agreement under UK law — and explains when to involve legal professionals.
- Begin with the Basics: Who, What, and Why
A contract must clearly identify the parties involved. Use full legal names, business names (where relevant), and current addresses. Specify whether each party is an individual, a sole trader, a limited company, or another type of legal entity.
Next, define the purpose of the agreement. For example:
“This agreement is made between Jane Smith of Smith
Consultancy and XYZ Ltd for the provision of marketing consultancy
services.”
This clarity sets the tone for the rest of the document.
- Define the Scope of Work or Services
A common source of contract disputes is vague or poorly defined obligations. Be precise about what is being provided, delivered or performed. Include:
- What will be done
- By whom
- How it will be delivered (e.g., in person, remotely, via software)
- When key milestones or deadlines fall
For example:
“Smith Consultancy will provide weekly marketing support for
XYZ Ltd, including SEO audits, content planning, and campaign
performance reports, commencing 1 June 2025 and ending 31 August
2025.”
- Set Out the Payment Terms
Money matters should be spelled out clearly:
- The total amount due or hourly/day rate
- Payment method (e.g., bank transfer, invoice terms)
- Payment frequency (e.g., upon completion, weekly, monthly)
- Late payment consequences (e.g., interest under the Late Payment of Commercial Debts Act 1998)
Avoid ambiguity to prevent chasing unpaid fees or dealing with surprise costs.
- Include Termination Clauses
Even in the best-case scenario, it's wise to plan for how the agreement may come to an end. State:
- The notice period required to terminate
- Whether termination is allowed without cause
- What happens to fees or work-in-progress upon early termination
For example:
“Either party may terminate this agreement with 14
days' written notice. Fees incurred up to the date of
termination remain payable.”
- Add Essential Legal Clauses
To protect both parties and ensure the contract is enforceable, include:
- Confidentiality – Especially where sensitive data, trade secrets, or client information is shared
- Intellectual Property – Who owns any work created during the contract
- Limitation of Liability – Caps on what one party can claim from another
- Dispute Resolution – Preferred methods (e.g., mediation before litigation)
- Governing Law – Confirm the contract is subject to the laws of the country
These clauses help reduce risk and clarify responsibilities in the event of a dispute.
- Sign and Store
Once both parties agree on the terms, the contract should be signed and dated by each party. In most cases, contracts do not need to be witnessed, but witnessing can add legal strength, particularly in high-value or long-term agreements.
Ensure all parties retain a copy of the signed contract, whether in paper or digital form.
When to Seek Legal Advice
While many simple agreements can be created using the steps above, certain situations require professional input:
- Complex services or payment structures
- Long-term supply or service arrangements
- International elements (e.g., overseas clients or suppliers)
- Intellectual property rights or licensing
- Employee or contractor agreements
A bespoke contract drafted by a solicitor can prevent costly legal problems and provide peace of mind.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
