How to Write a Contract: 14 Steps for Drafting Clear Agreements

Unclear contract terms frustrate legal, stall IT approvals, and push close dates into the next quarter.

For revenue-focused sales teams, knowing how to write a contract is a deal velocity problem as much as a legal one. A contract missing key clauses or built around ambiguous payment terms slows approvals, invites redlines, and gives procurement a reason to pause.

Building a repeatable drafting process that covers the right clauses, structures payment terms in plain language, and moves through signing without unnecessary back-and-forth removes that friction before it starts.

This guide breaks drafting contracts into 14 concrete steps, from defining deliverables and payment terms to building in dispute resolution, legal protection, and legally binding electronic signatures. Whether you're tightening up your current process or building one from scratch, these tips give your team a system for closing faster without adding admin burden.

What is a contract, exactly?

A contract is a legally binding written agreement between two or more parties involved that defines obligations, terms, and conditions.

Sales contracts set the ground rules for deliverables, payment schedules, and consequences when either party falls short. A written contract gives both parties a clear reference point, reduces the likelihood of disputes, and creates a legally enforceable record if terms aren't met.

While a verbal agreement can technically be binding, a written contract is the standard for any business transaction where money, services, or intellectual property are involved.

Do you need special qualifications to write a contract?

While lawyers are essential for complex deals, creating basic business contracts is something every business owner can and should feel confident doing. Think of it like writing detailed instructions—you're simply spelling out what both parties have agreed to, what services or products will be delivered, and how payment will work.

Well-structured contract templates can provide the foundation you need to protect your interests for standard business transactions like consulting projects, service agreements, or freelance work. Just remember to keep the language clear and specific and avoid legal jargon. Of course, when deals get complicated or involve significant risk, bringing in legal expertise makes sense.

Read next: How to Create a Legal Contract Without a Lawyer

Core components of all contracts

Regardless of deal size or industry, most contracts rely on the same essential component parts. Missing even one can make an agreement unenforceable. The table below covers what each component means and how it applies in practice.

How to write a contract in 14 steps

The steps below cover how to draft a contract that protects both parties, defines clear terms, and moves through approvals without stalling. Follow these 14 steps to build contracts that hold up under scrutiny and close deals faster.

1. Start with a contract template

Starting from a blank page adds unnecessary friction to an already time-sensitive process. Contract templates give sales teams a structured foundation that covers essential clauses while remaining flexible enough to customize for specific needs.

Whether you need a consulting agreement, SaaS subscription contract, employment contract, partnership agreement, or professional services agreement, a well-built template eliminates guesswork and ensures consistency across your pipeline.

Qwilr makes it simple to transition from proposal to contract by adding formal legal agreements directly to proposal pages. Teams can choose from a library of preapproved contract templates, transition from proposal to contract, collect secure payments, and close with legally binding electronic signatures.

You can also take advantage of Qwilr’s in-app legal templates through our partnership with Lawpath, Australia’s leading online legal platform. Attach these ready-to-use contracts—available for Australia and the US—directly inside Qwilr documents.

Using a template reduces the time spent drafting, minimizes legal review cycles, and gives every deal a defensible starting point. Since 32% of sales teams cite process automation as their biggest challenge, and 27% struggle with personalization, a standardized template solves these problems by creating consistency without losing flexibility.

2. Define the purpose and scope of the agreement

Before filling in contract details, clarify what the agreement is intended to accomplish and where its boundaries are. Scope definition prevents disputes later by establishing what's included, what falls outside the agreement, and who owns what when the work is done.

Define the purpose clearly: does this agreement protect intellectual property, establish service levels, set project milestones, or manage ongoing vendor relationships? Then map out what's included and what's excluded.

Scope ambiguity shows up differently depending on the deal type. A SaaS implementation contract should specify whether professional services, training, and ongoing support come with the base price or require a separate purchase. A consulting agreement should make clear who owns the work product, whether the consultant keeps ownership, transfers it to the client, or both parties share specific rights.

3. Identify all parties and decision-making authority

Every contract must name the individuals or entities, capturing basic information like full legal name, business entity type, and primary address. Clear party identification establishes who has the authority to make decisions, approve changes, and sign off on deliverables.

This aligns with HubSpot data showing that modern deals involve an average of five decision-makers, and 28% of deals fail because buyers can’t secure internal approval — two problems solved by clearly defining roles and sign-off authority in the contract.

Qwilr's analysis found that proposals viewed by multiple stakeholders within the first few days are 1.9 times more likely to be accepted. Naming every decision-maker in the contract upfront and ensuring they've all reviewed the terms removes the approval bottlenecks that stall deals

Decision-making authority varies by deal structure and organizational hierarchy. A marketing agency contract should specify whether the client's Marketing Director can approve deliverables independently or if the CMO's sign-off is required.

For contracts involving multiple stakeholders and other stakeholders like parent companies or subsidiaries, list primary contacts, escalation points, and who holds final approval authority. If a deal involves parent companies, subsidiaries, or third-party vendors, name each entity explicitly and define its role in the agreement.

4. Outline key terms and conditions

Terms and conditions cover the scope of work, exclusivity agreements, confidential information requirements, usage rights, and any constraints or limitations that govern how the relationship operates. The section sets ground rules for what each party can and cannot do throughout the agreement.

Define the scope boundaries:

• What work falls inside the agreement, and what requires a separate statement of work or change order?
• What timelines apply to each phase of work?
• What restrictions apply to either party during the engagement?

Next, address the modification terms. If either party wants to change the scope, deliverables, or timeline mid-engagement, how does that happen? Define whether changes require written approval, a formal amendment or addendum, or can proceed with email confirmation. Using clear language throughout helps all parties involved understand their obligations without needing to hire legal professionals to interpret the terms.

5. Define deliverables and acceptance criteria

Deliverables are what you're contractually obligated to provide, and it's important to define terms precisely so both sides share the same expectations. Acceptance criteria define when those deliverables are considered complete and satisfactory. Clear acceptance criteria prevent scope creep and keep projects moving.

Georgia Mobley, Customer Success Manager at a small to medium-sized business, makes the case for documenting outcomes from the start when writing a successful plan:

List each deliverable with enough specificity that both parties can verify completion. For example, a consultant might specify three strategy sessions, two written reports, and a final implementation roadmap.

Then define acceptance criteria for each deliverable, like what conditions must be met for the client to accept the work as complete, or does acceptance happen automatically after a review period, or does it require explicit written approval?

When both parties know what "done" looks like upfront, there's less room for disagreement at delivery.

6. Establish payment terms and schedules

Payment disputes are one of the most common reasons contracts end up in conflict. A clear payment schedule protects both parties by defining when payment is due, how much, and what happens if deadlines are missed.

Structure payment terms based on your deal model and the specific circumstances of the engagement:

• Milestone-based payments: Like 30% upfront, 40% at midpoint, 30% upon completion
• Monthly retainers: Recurring payments with net-15 or net-30 terms
• Fixed project fees: Scheduled installments tied to delivery phases

Qwilr simplifies payment terms by letting teams embed interactive pricing tables and quote blocks directly into contract proposals.

Teams can also embed walkthrough videos explaining payment structures or add calendar links to discuss terms before signing.

7. Add termination conditions and notice periods

Termination clauses define how either party can exit the agreement and what happens afterward. Clear termination conditions give both parties a defined exit path without forcing a legal dispute to close out the relationship.

Specify notice requirements. For example:

• Ongoing service agreements typically require 30 days' written notice.
• Project-based contracts might allow termination at specific milestones with shorter notice windows.
• High-value enterprise deals often include 60- or 90-day notice periods to allow for transition planning.

Next, define what happens upon termination. Does the client pay for work completed to date? Who retains ownership of work in progress? Are there penalties for early termination, or does either party have the right to terminate for convenience?

Finally, include immediate termination rights for specific deal-breakers such as breach of contract, non-payment beyond a defined cure period, or violations of confidential information or compliance terms.

8. Build in a dispute resolution process

Disputes happen more often than most organizations expect. A structured resolution process keeps conflicts from escalating into expensive litigation and gives both parties a clear path to resolution.

Structure dispute resolution like a ladder, with escalating steps:

Also, include a timeline for each step so disputes don't sit unresolved indefinitely. A 30-day window for informal resolution and a 60-day window for mediation keep the process moving without forcing premature legal action. These tips apply whether you're a small business or a large enterprise: the ladder structure works across organizations of all sizes.

9. Address liability limits and indemnification

Liability clauses protect both parties from unlimited financial exposure when deliverables fail to meet expectations, deadlines are missed, or errors cause downstream business impact. Without clear liability limits, a consultant could be held responsible for a client's entire revenue shortfall, or a vendor could face claims that far exceed the contract value. This is why legal protection through well-drafted liability clauses serves the interests of both parties.

Cap financial liability at a defined amount: typically the total contract value or the fees paid in the prior 12 months. Capping protects service providers from disproportionate claims while still holding them accountable for damages caused by negligence or breach.

Indemnification clauses also address who's responsible when third-party claims arise. For example, if a client's use of delivered materials violates a third party's intellectual property rights, the indemnification clause defines whether the client or vendor bears responsibility.

Clearly defined liability limits and indemnification terms protect both parties from unreasonable financial exposure while maintaining accountability.

10. Include standard boilerplate clauses

Boilerplate clauses address edge cases that may never arise, but when they do, having them in place prevents costly disputes.

Key boilerplate clauses to include:

• Force Majeure: Protects both parties when events beyond their control impact performance, such as pandemics, natural disasters, cyber attacks, government actions, or supply chain disruptions.
• Assignment Rights: Defines whether either party can transfer the contract to another entity or transfer ownership of assets created under it. This matters most in acquisitions, mergers, or when a vendor wants to subcontract work.
• Severability: Ensures that if one clause is found invalid or unenforceable, the rest of the contract remains intact. Courts can remove the problematic clause without voiding the entire agreement.
• Non-Waiver: Protects your right to enforce contract terms even if you've shown flexibility in the past. If you don't enforce a late payment penalty once, this clause ensures you can still enforce it later without losing that right permanently.
• Entire Agreement: Confirms that the written contract supersedes all prior discussions, emails, or verbal agreements. This prevents disputes over what was "promised" outside the contract.

Boilerplate clauses may feel unnecessary when deals are moving smoothly, but they become critical when circumstances change unexpectedly.

Read next: How to write an addendum to a contract

11. Specify governing law and jurisdiction

Every contract should state which jurisdiction's laws govern its interpretation and enforcement, especially when parties operate in different states or countries, where contract law can vary significantly. Governing law clauses prevent disputes over which legal framework applies if the contract ends up in court or arbitration.

Also specify where disputes will be resolved: whether in a specific court jurisdiction or through arbitration in a defined location, to prevent one party from forcing the other party into inconvenient or expensive legal proceedings across state or international lines.

12. Review and edit for completeness

Before finalizing a contract for signature, review it against your deal terms and business requirements. Missing clauses, inconsistent terminology, or vague language create approval delays and invite redlines from legal teams.

Check these sections specifically:

• Payment terms match what was agreed in the proposal
• Deliverables align with scoping conversations
• Termination clauses provide clear exit paths without leaving either party exposed
• Liability limits protect you from disproportionate claims

If the contract references external documents like statements of work, appendices, or product specifications, confirm that those documents are attached and version-controlled. A contract that references "Exhibit A" without including it will stall in legal review immediately.

13. Streamline signing and payment collection

Make the signing process as simple as possible. Use the best e-signature software with legally binding electronic signatures that allow clients to sign directly within the contract page without downloading, printing, or switching platforms. For high-value deals, embed a brief walkthrough video or add a calendar link so clients can discuss terms before parties sign.

Payment collection should happen immediately after signature. Qwilr's native payment processing tool, QwilrPay, lets clients pay deposits or full invoices directly from the contract page, eliminating the need for separate invoicing workflows.

Qwilr’s analysis also found that including interactive elements increases acceptance rates by up to 200%. Proposals featuring interactive content blocks specifically saw a 103% higher acceptance rate compared to static documents.

Removing friction at the signing stage through interactive pricing, embedded video, and in-document e-signature keeps momentum from stalling at the finish line.

14. Store contracts and maintain an audit trail

When finalizing your contract storage process, ensure signed contracts are stored securely with a complete audit trail that tracks every interaction and stays up to date as amendments are made. If a dispute arises, you'll need proof of what was agreed, the date it was signed, and whether the client viewed or acknowledged key terms.

Qwilr creates automatic audit trails that log client views, electronic signature timestamps, payment confirmations, and any amendments made post-signature.

This record becomes critical evidence if the contract is ever challenged or if either party or any person within their organization claims they didn't see certain terms.

Streamline contract management with Qwilr

Contract drafting is only part of the deal cycle. Managing approvals, tracking revisions, collecting signatures, and maintaining audit trails across dozens or hundreds of active agreements creates operational overhead that slows teams down and introduces risk.

Qwilr provides end-to-end contract management for the entire lifecycle. Teams can draft, approve, sign, and store contracts in one platform without switching between tools or chasing down signatures through email.

Stop losing deals to contract friction. See how Qwilr streamlines the entire contract process — try it for free.