What Goes Into Making a Contract: Understanding the Structure of a Standard Contract

Have you ever finished a project only to face payment disagreements because the scope shifted midway through? Or hired a new vendor and watched as the timeline stretched weeks beyond what you originally discussed?

When businesses face payment-related challenges, relying on verbal agreements or scattered email threads can lead to unclear deliverables and strained business relationships. 

In situations like these, it’s common to wonder how written agreements help clarify expectations. 

Written contracts are widely used to document responsibilities, timelines, and payment terms for both parties to reference. Understanding the typical structure of these agreements and the terms they often include can help navigate business relationships with greater confidence. 

This article explores common questions about standard business contracts, outlines the elements frequently found in different types of agreements, and highlights modern digital tools that can help streamline the process of creating and signing them.

This blog post is offered for general information purposes only. It does not constitute, and is not a substitute for, legal advice.

Key takeaways

• Written contracts are widely used to document expectations, clarify responsibilities, and help prevent misunderstandings such as scope changes or payment disputes.

• Many small businesses review agreements to confirm they address common elements like payment terms, scope of work, and conditions for ending the relationship.

• Contract details often vary depending on whether the agreement is with a client, vendor, or freelancer, which can influence the types of terms included.

• Using structured templates and digital tools can make it easier to create, sign, and manage agreements efficiently.

What is a contract?

A contract is an agreement between two or more parties that describes what each side is responsible for doing. In business settings, whether you are providing services, purchasing supplies, or entering into another type of arrangement, written contracts are commonly used to outline timelines, payment terms, and other expectations, so everyone has a shared reference point. 

In many jurisdictions, contracts are generally understood to involve parties who have the capacity to agree and to exchange value. 

While an informal agreement can work for quick or simple deals, many businesses rely on written agreements because they provide a clearer record of what was discussed and how the work is intended to proceed.

Can I write a contract myself?

Yes, many people draft their own contracts for everyday business transactions, especially when the terms are straightforward. For more complex transactions, some businesses choose to involve legal professionals, but for routine agreements, it’s common for small business owners to prepare their own written terms.

Most contracts follow a similar structure and address a set of commonly used elements. These sections help both parties understand what was discussed and how the work is intended to proceed. Agreements often include: 

• Parties involved: Clearly identify who is entering into the agreement, using the correct legal or business names.

• Scope of work: A description of what is being provided, purchased, or delivered, along with any tasks or milestones that help clarify expectations.

• Payment terms: Information about pricing, payment schedules, deposits, invoicing timelines (such as Net 30 opens in a new tab), or other financial details.

• Timelines and deadlines: Dates for when the contract starts, key milestones, completion expectations, or renewal timing.

• Roles and responsibilities: An outline of what each party contributes, such as approvals, materials, or feedback.

• Termination clauses: Conditions under which the agreement may end early, including any notice periods.

• Dispute-resolution process: A brief explanation of how disagreements may be addressed if issues arise.

• Signature details: Space for all parties to sign, including individuals authorized to represent a company.

How contract needs can vary by use case

While standard elements form the foundation of most agreements, the specific contract terms often shift depending on the type of relationship and the activities involved. 

Reviewing the details that commonly appear in different types of contracts can help ensure the document reflects the practical needs of the situation:

• Client agreements: Service-based contracts often place greater emphasis on the scope of work, revision processes, approval timelines, and payment schedules.

• Vendor agreements: Purchase orders and supplier contracts typically focus on delivery expectations, inventory requirements, and pricing structures.

• Freelancer agreements: Contracts with independent workers frequently address deliverable ownership, intellectual property considerations, and the individual’s status opens in a new tab as an independent contractor.

• Employment contracts: HR-related agreements can involve additional considerations, such as benefits and worker classification issues, which are often handled with added attention to regulatory requirements.

Best practices for writing a clear contract

Many well-structured contracts share similar qualities: they’re easy to read, straightforward to interpret, and minimize ambiguity so both sides can operate with a shared understanding. 

The following approaches are commonly used to improve clarity in written agreements:

• Use plain language: Simple, direct wording often makes contract terms easier to understand than dense, technical phrasing.

• Be specific: Concrete details, such as dates, quantities, or defined timelines, help reduce uncertainty and subjective interpretation.

• Stay consistent: Refer to parties, services, or deliverables by the same name throughout the document to maintain clarity.

• Break up the text: Headings, shorter paragraphs, and bulleted lists can make longer agreements easier to navigate.

• Define important details: Outlining payment timing, approval steps, and other key processes helps both sides interpret the sequence of events consistently.

• Write for future clarity: Agreements are sometimes reviewed by people who weren’t part of the original discussion, so clear explanations can help avoid confusion down the road.

Leveraging contract templates for help

Even with a solid understanding of best practices, starting from a blank page can be intimidating. That’s where Docusign’s contract template library can be especially useful.

Templates offer a structured starting point and support, and help create more consistent agreement across a company. Starting with an established framework allows teams to focus on the business-specific details that matter most.

To get the most value from templates, many organizations select one that aligns closely with the type of agreement they’re preparing, such as real estate transactions, creative-service arrangements, or product-sales terms, and then tailor the standard language to reflect the particulars of the relationship. Relying on a template without reviewing it, however, can result in including terms that don’t fit the situation or omitting relevant details, so make sure to give it a thorough read through.

As a business scales, managing documents manually can become increasingly challenging. Digital tools, like Docusign Agreement Preparation, can help streamline the creation process and make it easier to update, reuse, and standardize agreements across a team.

Using digital tools to simplify contract creation and signing

Drafting a contract is only one part of the overall workflow. Businesses also benefit from efficient processes for preparing documents, routing them for review, collecting signatures, and securely storing them. 

Modernizing an agreement-management process can reduce friction and improve productivity, with some studies showing that digital transformation can reduce transaction costs opens in a new tab by as much as 13.3%.

Digital tools can support reusable templates, accelerate document preparation, and reduce manual data entry. Instead of printing, scanning, or managing long email threads, teams can manage the entire workflow from a single platform and use electronic signatures to move agreements forward faster.

If agreements are a regular part of your business operations, digital solutions can make the process more manageable. Docusign Intelligent Agreement Management offers one way to create contracts more efficiently and move agreements from draft to signature with more confidence.