Mutual Agreement Contract Defined
A Mutual Agreement contract is an instrument whereby two or more parties enter into an agreement with certain terms and conditions that govern specific aspects of their relationship. The purpose of the contract is to make sure that all parties understand their obligations to each other to avoid disputes and allow a clear roadmap to amicably resolve any issues that arise from the agreement. Such contracts are drafted and dated, signed by the parties and each party is given the original signed contract. Once there is a binding agreement in place, the parties are required to adhere to its terms and either party can bring a breach of contract claim to the courts in the event one of the parties breaks the agreement or fails to live up to its obligations .
Typically, a Mutual Agreement contract will be used in commercial and business transactions, where the parties have to deal with many specific details. Items such as:
The contract defines each party’s rights and remedies under such agreements, and a clear Mutual Agreement is necessary between the parties. Therefore, a parties intent, especially a landowner’s intentions, under a Mutual Agreement is to reach an understanding between themselves, which serves on the one hand to satisfy the parties involved and the other, protect themselves in the event of a subsequent dispute and/or claimed breach of contract.
Contract Elements of a Mutual Agreement Contract
Mutual agreement contracts typically contain several key elements. First, the parties must be clearly identified, whether that be a person, group, association or business. Second, the terms and conditions of the contract should be laid out in an easily understood manner, as the intent of the contract must be transparent and obvious to both parties. Parties do not need to verbally communicate their agreement – this is known as a "meeting of the minds." Instead, mutual consent can be inferred from the actions and conduct of the parties.
Both parties to a mutual agreement contract must have an obligation in order for contract to be enforceable. Effects of a breach should also be outlined in the contract. Several options exist for the type of remedy that can be provided against a party that does not live up to their end of the deal. The form of remedy often attached to a mutual agreement contract is monetary damages. Courts often will order the offending party pay an amount of damages as a result of a contract breach.
In some occasions, specific performance may be awarded. Specific performance is when a court seeks to make the offending party follow through with the terms of the contract as stated. Subsequently, equitable relief allows for the court to make a decision that is beneficial to both parties outside of money. A fourth option includes rescission, which is a decision that nullifies the contract altogether. Generally, courts prefer when a party is awarded monetary damages instead of any other form of remedy. However, all forms of remedy can fall under the category of "equitable relief."
How to Write a Mutual Agreement
A mutual agreement contract is one of the most common but also important contracts that you will execute in your personal and business life. You may be agreeing to do something or to refrain from doing something in exchange for something from the other party. No matter what it is, a mutual agreement contract does not have to be extraordinarily long or complex to be enforceable. However, you still need to go about drafting them in an orderly fashion.
First, draft the introductory paragraph. This paragraph should include sufficient information about the parties. This includes their legal names (and doing so does not curtail their legal rights) and other information that will help identify them. In an employment contract, for example, you may want to include the employee’s address and other contact information. In an NDNA contract, the other party may be a corporation and you will want to include their legal name and registered agent as well as address.
Second, put disclaimers and definitions at the bottom of the contract. It is always helpful to include disclaimers and definitions at the end of a mutual agreement contract. While you want your terms as concise as possible, you also want the meaning to be clear. For this, you can define things once and refer to them throughout the contract.
Third, include the alternative dispute resolution agreement. In some contracts, this is going to be the entire contract. Even if it is not, you do want to explicitly put alternative dispute resolution (ADR) in there. The reasons for that consist of the fact that ADR is generally much cheaper than the costs associated with litigation. If you have a jury in your agreement with another party, it will be at least three times cheaper to have ADR.
Finally, have the party’s contact information at the end of the contract. If at some point, the party needs to get in contact with you about the contract, it is imperative that the contact information is included. To that end, the party’s contact information should be at the end of the contract.
A Mutual Agreement Contract Sample
Agreement and Acceptance
This Agreement is made as of [insert date of contract start], between [Insert name of Contractor] (hereinafter called the "Contractor") with a place of business located at [Insert contact address and/or phone number 1 here] and [Insert name of Client] (hereinafter called the "Client") with a place of business located at [contact address 2 and/or phone number here].
Scope of Work
The Contractor agrees to provide the following services to the Client: [Insert description of work to be performed (if any)](the "Services"). The Contractor may, from time to time, find it necessary to sub-contract for Services covered under this Agreement. As such, this Agreement constitutes the entire agreement of the parties with respect to its subject matter.
Whereas, it is necessary for the Contractor to have access to certain confidential information and records (the "Confidential Info") of the Client; and,
Whereas, the Contractor acknowledges that any Confidential Info it receives must be considered confidential and this Confidential Info must not be disclosed to any outside parties while the Agreement is in force;
Now, Therefore, in consideration of the mutual covenants and obligations set forth below, the Client and Contractor do mutually agree as follows:
Nature of Agreement
This is an open-ended agreement between the Client and Contractor, which provides the Client with the ability to purchase Services as needed, from the Contractor. The Client agrees to purchase those Services that the Contractor has competencies for. The Contractor’s Services include, but are not limited to, the following: [Generally describe the services to be provided. The language must detail a broad range of services that leaves the door open if Contractors are to obtain other services in the future].
Payment Terms
The Contractor shall receive payments that are outlined in [Payment Plan]. Payment is due upon completion of tasks, or for large projects, at milestones agreed upon prior to commencement of the task or project. The Contractor may terminate its obligations under this Agreement, and/or suspend any Services, for failure of the Client to comply with the terms of the Payment Plan for an extended period of time. The Client agrees that it will review and pay all invoices within thirty (30) days of receipt and that the Client will be subject to a late fee of 3 percent (3%) per month for any amounts it owes to the Contractor that are more than thirty (30) days past due.
Term of Agreement
This Agreement shall continue until terminated by either party upon seven (7) days prior written notice to the other party.
Compliance with Applicable Laws
Both parties hereto shall comply with the applicable provisions of all nations, states, provinces, counties, municipalities, countries, countries, territories, or other jurisdictions in which any part of the Services are to be performed or offered.
Warranties
The Contractor makes no warranties, express or implied, in fact, nor in law, as to the results to be achieved by the Client or to any parties. This Agreement may not be assigned or modified without express written consent from both parties.
Advantages of a Mutual Agreement
Engaging in any business contract without the proper paperwork in place can be risky. With a mutual agreement contract, both parties agree to complete your business deal as outlined from start to finish. It simply covers the terms and conditions of the agreement to hold each party responsible for their actions and expected behaviors throughout the life of the agreement. The contract includes how the partnership should unfold and how to handle disputes that may arise.
Whether it be a business partnership, sale of goods, or other financial responsibilities, the use of a mutual agreement contract ensures it is not a one-sided business transaction. When two parties enter into a mutual contract, they are in agreement that they are being treated equally. Meaning, they understand their roles and act accordingly. It may not seem like a big deal if they don’t have one in place. However, the absence of a mutual agreement contract could pose numerous problems for the business.
A mutual agreement contract is a way to protect the interests of both parties in a deal. For example, if you have a contract to build a new business structure , such as a restaurant, it may not be wise to not have a contract in place. This type of construction project takes a lot of money to complete, so having a contract ensures everyone is on the same page by completion.
Additionally, with a mutual agreement contract, the parties can avoid disputes over remaining payments after the services are performed or materials delivered. If the service provider believes they should be paid a large sum after performing a small amount of work, the client can refuse to pay the service provider until all of their requirements as outlined in the contract are met. However, without a contract, the client could end up paying the service provider the full amount for a job that is not performed adequately.
A contract also helps build trust between business partners. If both parties enter into a contract and fulfill their obligations, then it is demonstrated that they can be trusted to uphold their end of the deal at any point in the future. As more agreements are completed, trust continues to build and expand throughout the professional relationship.
What Not To Do
Common pitfalls occur both at the time the contract is entered into and at the time of breach of a contractual provision. We will consider those at the time the contract is entered into first.
One common problem relates to consideration. That is, whether or not the consideration for the contract is sufficient to support it, particularly if one party is providing an asset or a promise to do something in the future that does cross the line between a pre-contractual agreement and a contractual one. This issue presents particularly in the context of agreements between family members, or other people whom you care enough for to make promises with the intention that they should be kept, rather than with the intention of seeking redress in the event of breach. It is important when entering into a new contract, or varying an old one, to consider whether you are providing consideration that is sufficient to support the contract.
An additional area of potential pitfalls relates particularly to confidentiality provisions. You should ensure that these are not enforceable by or against someone who requires more access to the information than the terms of the confidential arrangements would allow, such as a new or potential employer or other principal.
Should you agree to the terms of a mutual agreement contract, it is equally important to ensure that you understand the terms, particularly those that may state that you are giving up an existing right, such as your right to bring a claim in respect of a matter, or that you are making new promises as part of the deal, such as to allow someone new access to your business.
Legal Help and Resources
In some cases, especially for complex agreements with significant implications for the parties involved, it may be prudent to seek professional legal assistance prior to drafting a mutual agreement contract. Professional legal advice can help ensure that the contract accurately reflects the intentions of the parties and has been negotiated in good faith. An experienced attorney can also help identify any potential legal issues that may not be apparent to the parties and advise them on how to avoid or mitigate those issues.
If you have specific concerns regarding the contents or enforceability of the mutual agreement contract , or if the contract involves complex legal issues, you should consult a qualified attorney. Legal services are available on an hourly basis or a flat-rate fee, depending on the lawyer’s billing structure.
If individual legal assistance is not an option, other resources may be utilized. The American Bar Association provides basic guidelines for mutual agreements, examples of mutual agreement contracts, and links to local bar associations that may be able to assist in finding a lawyer. Some local legal aid societies offer free or reduced-fee consultations.
Finally, there are plenty of online resources which can direct you to sample templates of mutual agreement contracts.