How to write a contract

To write a contract, name the parties exactly, state the key facts such as the start date and term, set out what each side will do and pay in numbered clauses, add the clauses that handle risk, termination and disputes, move changeable detail such as rates into schedules, and finish with signatures from people who can bind each party. Write in plain language, keep one obligation to each clause, and make every number and date specific.

Parties and background

Start with who is bound. business.gov.au’s guide to preparing a contract says to include at least full legal names and business addresses, both parties’ ABNs where needed, and an ACN if a company’s is different from the last nine digits of its ABN. A trading name alone is not enough; if a dispute reaches court, the legal entity is what counts.

Then put the facts people look up most often in one block near the top. The service agreement example opens with a table naming the provider and client, the agreement date of 18 August 2026, the commencement date of 1 October 2026, a 24 month initial term and Victorian governing law. Anyone checking when the contract ends or which law applies finds it on page two without reading a clause.

A short background paragraph can follow, saying why the parties are contracting. Keep it to what helps a reader interpret the deal later. Background is not the place for promises; those belong in the clauses.

The operative clauses

Operative clauses are the ones that create obligations. business.gov.au suggests even a short, simple contract should say what work will be done or what results achieved, how much, when and how payment is made, what conditions mean the work is finished, and how disputes are handled.

Write the work as a result wherever you can. The guide contrasts a clear description, with dates, times, a place, the number of staff and the materials included, with a vague one that just says someone will train employees in some software. The clear version is what a court or a mediator can apply.

The service agreement follows that pattern. Clause 1 lists four services: proactive monitoring, helpdesk support during business hours, preventative maintenance and network administration. Clause 2 turns “good service” into a table of four severity levels, where Critical means a 15 minute response and a four hour resolution target around the clock and Low means eight business hours and best effort. It then defines business hours and response time, so both sides measure the same thing.

Obligations should run both ways. The client’s clauses in the example cover access, a named primary contact, independent backups and cooperation, and the backup clause states plainly who carries a data loss.

Price clauses need the amount, whether it includes GST, when invoices are issued, when they are due and what happens if they are late. The example charges $8,400 a month plus GST with 40 hours included and $220 an hour beyond them, adjusts annually by CPI and sends invoices due in 14 days. The payment terms clause page shows sample wording and the variants worth considering.

Boilerplate that earns its place

The general clauses at the back decide what happens when something goes wrong, so they deserve more attention than their name suggests. The ones that matter most for a small business contract:

• Termination. For breach not fixed within a stated period, for insolvency, and what survives. The example allows termination for a breach left unfixed for 30 days, and suspension after seven days’ notice of non payment. The termination for cause clause explains the cure period.
• Liability. A cap and any exclusion of consequential loss. The example caps liability at twelve months of fees.
• Confidentiality and privacy. What is confidential, the exceptions and any Privacy Act duties.
• Disputes. A ladder of negotiation, then mediation, then court.
• Entire agreement, variation, notices and governing law. How the document is read and changed.

Unfair contract terms laws apply to standard form contracts with consumers and many small businesses, and the ACCC’s guidance lists terms that can be void, such as one side being able to change the price or end the contract whenever it likes. Check your boilerplate against that list before reusing it.

The guide to common contract clauses explained walks through twelve of these clauses in plain English, so they are not repeated here.

Schedules and the detail that changes

Anything likely to change during the contract belongs in a schedule: rate cards, service levels, site lists, specifications, milestones. The body refers to the schedule, and a price review replaces one page. The master services agreement example takes this to its conclusion: it holds no scope and no price at all, and each new job is added as a statement of work under it.

Signing

business.gov.au says both the contractor and the hirer must sign for the contract to be valid, with witnesses where needed. Each signature block should show the person’s name, their title and the company they sign for, plus a date. A company signing under the Corporations Act usually signs through two directors, or a director and a secretary, or a sole director; if in doubt, ask who is authorised before the signing date.

Keep the fully signed copy somewhere both sides can reach, and treat any later change as a signed variation rather than an edit to the original.

The structure at a glance

The table at the end of this article lists thirteen sections of a typical services contract, what each is for, and how the service agreement example handles it. Use it as a drafting order: if a row is missing from your draft, either add it or be able to explain why this deal does not need it.

Common mistakes

Trading names instead of legal entities. The contract should name the company or person that can be sued.

Clauses that do three things. A clause with “and also” is two clauses; split it so each can be amended alone.

Vague scope. “Support as required” invites a dispute about what was required.

No exit. A contract with no termination clause leaves both sides arguing about the general law.

Borrowed boilerplate. A precedent written for another industry, another state or a much larger deal can carry terms that are unfair or simply wrong for yours. The freelance agreement example shows how much a short plain language contract can cover. For whether there is a contract at all, the note on consideration in a contract explains the element most often missing from informal deals.

Build it

A document here is classified before it is written, including its register and structure, and a contract is normally classified as legal register with a numbered structure, so it is built from numbered clauses rather than decorated headings. A table of contents is only used on long documents of six pages or more, with titles that match the headings exactly. A letterhead is used only when a document speaks for a sender, so a two party agreement does not carry one. Documents do not print citations, so any statute a clause relies on is written into the clause as text.

The AI chat edits text only: it can rewrite what a clause says, but structure is changed in the builder. For signing, one signature block party is one signer, each with a name, email and signing order. The page on numbered clauses shows how clauses and sub clauses are laid out, and the tutorial on sending a document for signature covers the signing step.