Types of Contracts

Types of Contracts

There may come a time when you find yourself needing to know how to write your own contract, or at least needing to know how to read a contract you are required to sign. It is always helpful to know a lawyer in this case, since the language used in legal documents is often obfuscated and abstruse.

But if you don't know a lawyer, you should at least go into any contract situation with knowledge about what kinds of contracts are out there, and what each type should include.

Here's a basic list to get you started:

Employment contracts. These are contracts agreed upon by an employer and employee. They establish the position an employee will hold, what is expected of him/her, and what kind of compensation, including salary and benefits, he/she will receive for performing this job. These contracts should also include details about termination.

Sale contracts. Whether selling a home, a car, or just an old MP3 player, you'll want to have the same standard provisions in your contract. These contracts need to include a description of the item being sold, the payment required for the purchase, the method in which this payment will be made, the responsibilities of both the seller and the owner, and details about any recourse one or the other may take if payment is not made or the product is not as it was described.

Rental contracts. You may be renting an apartment or some equipment. Either way, make sure the contract includes the term of the rental, the rate, how late fees can be incurred, who is responsible for damage caused to the equipment or the apartment, and who will hold the appropriate insurance policies.