A contract is a legally binding agreement between two or more parties in which an exchange of value is made. The contract’s purpose is to set out the terms of the agreement and provide a record of that agreement which may be enforceable in a court of law. Contracts may come in many forms, each with its own use and purpose. A contract can be anything from a formal written document to a verbal promise.

Types of legal contract

• Legal Agreements Overview
• Express Contracts
• Implied Contracts
• Bilateral and Unilateral Contracts
• Unconscionable Contracts
• Adhesion Contracts
• Aleatory Contracts
• General Business Contracts
• Executed Contracts

Written contracts

Written contracts provide more certainty for both parties than verbal contracts. They clearly set out the details of what was agreed. Matters that can be set out in a contract include:

• materials
• timeframes
• payments
• a procedure to follow in the event of a dispute. 

It’s much safer to have something in writing than to rely on someone’s word. A written contract will give you more certainty and minimize your business risks by making the agreement clear from the outset.

Benefits of a written contract

A written contract can:

• provide proof of what was agreed between you and the hirer
• help prevent misunderstandings or disputes by making the agreement clear from the outset
• give you security and peace of mind by knowing you have work, for how long and what you will be paid
• clarify your status as an contractor by stating that the contract is a ‘services contract’ and not an ’employment contract’ — this will not override a ‘sham’ contract, but a court will take the statement into account if there is any uncertainty about the nature of the relationship
• reduce the risk of a dispute by detailing payments, time frames and work to be performed under the contract
• set out how a dispute over payments or services provided will be resolved
• set out how the contract can be varied
• serve as a record of what was agreed
• Specify how either party can end the contract before the work is completed.