What is a Model Contract?
Model Contract Samples are standardized agreements utilized to underpin a particular contractual relationship between the parties, containing common contractual provisions and industry-specific terms. Such contracts are the foundation for many transactions, including licensing, employment relationships, commercial sales of goods and services, and trade secrets and confidentiality agreements and licenses.
The purpose of a model contract is to set forth in writing both the company’s and other party’s respective rights, responsibilities, and obligations as well as their expectations. Model Contracts can be used to provide a framework for subsequent more complex or tailored agreements . Particularly for start-up companies and sole proprietors, using a model contract can save time and money when entering into an agreement with a party for the first time. The overall goal of the model is to provide a mechanism for determining what constitutes a breach of the agreement and how that breach should be resolved.
For model agreements in a business setting, the fundamental principle underlying its creation is economic. Economic efficiency is achieved through uniform (as opposed to customized) pre-written agreements, thereby reducing time and expense associated with negotiations and/or enforcement.
Components of a Model Contract
The elements of a model contract can vary depending on the jurisdiction, type of model, and regulations governing model contracts. However, there are common features of model contracts that can be found across the board. These are generally outlined below: Model contracts typically contain information about the parties to the contract. This includes the name and address of the agency and the model. It is important for the agency to be a legitimate company registered with Companies House (UK) or equivalent body in other jurisdictions. This information should be detailed in the definitions and interpretation section of the contract. The contract terms and conditions should be clearly laid out in the contract. This includes: The notice provisions in model contracts: A model contract should contain a notice provision that outlines how parties are to provide legal notice to one another. The notice provision should set out the addresses for the parties and the method of delivery to be used. The method of delivery should take into account the time it will take for each party to receive the notice—the quicker the method of delivery, the shorter the time period contained in the notice provision should be. A physical address and/or email address for the delivery of notices is typically required. Governing law and jurisdiction: The jurisdiction which governs the model contract should be set out in the contract. This governs which laws apply to the contract and which courts have the power to resolve disputes should they arise. Requirements for signature: The model contract should detail the manner in which the contract is to be executed. Generally, this means that the contract is formulated as a deed, and the parties to the contract have signed the document before a witness. Alternatively, the contract is signed and dated by the parties. In the UK, for example, up to 31 January 2023, electronic signatures are acceptable. After that date, electronic signatures must be either "e-ID as a service" or qualified electronic signatures. In the United States, electronic signatures are allowed in most cases but may not be acceptable for certain documents depending on applicable federal and state laws. Standard clauses: There are certain standard clauses that models should expect to find in a model contract. These include, but are not limited to, the following: Confidentiality clause: A confidentiality clause prevents the model from disclosing confidential information about the modeling agency, their clients, or other models to prevent damage to the modeling agency or other models. The clause should outline what is considered confidential information as well as the duration of the obligation of confidentiality. Force majeure clause: A force majeure clause states that neither party will be held liable for any delays or failures to perform any of their obligations under the contract if such a delay or failure results from circumstances beyond the reasonable control of either party. Events such as natural disasters, acts of terrorism, and strikes are some of the circumstances that would typically be considered beyond the reasonable control of the parties. Termination/renewal clause: This clause sets out the conditions under which a modeling contract may be terminated by either party. This includes the right to terminate if the model breaches the contract, or if the model moves overseas. This clause may also set out the notice period a model must give the agency before terminating the contract. Independent contractor clause: Modeling agencies and models are typically independent contractors. However, this clause is included to avoid either party being treated as an employee of the other or being entitled to the benefits or pay of the other. Restrictive covenants clause: This clause prevents the model from engaging in any activity that would undermine the modeling agency’s business while working with the modeling agency. These restrictive covenants may vary from contract to contract but can include restrictions on work for competing agencies, work in a competing field, or the solicitation of clients or other models.
Advantages of Model Contracts
Models contracts also save time. There is no need to spend hours drafting a contract from scratch and negotiating the terms because the main negotiation points have been addressed. The model contracts can also save time when incorporating language addressing potential changes in law, governing jurisdictions, and other items that can be changed on a case-by-case basis. Time can be saved by having only the essential items negotiated.
Using model contracts reduces the risk of violating laws. If language compliant with the law is used in a model contract, such as language requiring the payment of wages according to the Fair Labor Standards Act, the application of that language to future relationships has a much lower risk of non-compliance. Also, a company can choose to focus on its business rather than trying to stay abreast of the myriad of laws that affect businesses.
The use of model contracts increases consistency. By using model contracts, companies and professionals show their clients that they have the same approach for everyone. That is why the model contracts are consistent with the company’s policies.
Types of Model Contracts
When dealing with contracts, the wide variety of industries can get confusing and sometimes overwhelming as its a lot of information to digest. That is why there is a requirement for model contracts that cover all bases and help those who are not lawyers understand what is needed for their case. Some good examples of the types of model contracts available include sales contracts, service contracts, employment contracts and Bond sales agreements.
Sales Contracts are agreements in which products are sold to purchasers in exchange for a sum of money. These are effective at locking both parties in and making sure that a sale goes ahead. The fundamental features of a sales contract are the offer, acceptance, consideration and intention to create a legal relationship. In the past, many things used to be done face to face, nowadays these contracts are almost always done over the internet.
Service Contracts are legally binding agreements between a service provider and a customer. Once signed they make it clear what each party is agreeing to, the services the provider will be offering, when they will be offered and how much they will cost. Many of them also include a clause that allows the service to be terminated earlier than expected. This makes it clear whether or not any compensation is due in this instance. The general idea of a service contract is to define a common understanding of the agreement between the two parties. Contract templates save a lot of time in having to work on a contract from scratch , particularly if you are inexperienced.
Employment contracts are formal agreements between employers and employees. They set out terms and conditions of employment, including things such as wages, confidentiality, hours of work, annual leave entitlements and so on. A contract of employment is not the same as Job Offer letter, it actually forms part of a written record of the main particulars of employment. Contracts of employment may be verbal or written, however, a written record must be given to the employee before their employment begins otherwise application can be made to the Employment Tribunal for a Written Statement Order. Not all employment arrangements require a contract or written statement but these are generally for very high earning, highly skilled employees for whom a written statement may not be necessary.
Bond sales agreement are sold by an investor to raise immediate capital. The investor sells the bond to a buyer for cash with the understanding that the buyer is required to ‘hold’ the bond until its maturing date. With bonds there is an interest rate already associated with the bond, so once the bond matures, the buyer gets their original investment back plus interest on top. A bond sales agreement include information such as date of issue, the bond series number, bond fund, classification of the bond, issue price, sales amount and any and all fees charged. The buyer must also give the seller their name and contact information.
Customizing a Model Contract
Once you have thought about the need for a contract and have found a model contract that will meet your needs, the next step is to modify the model contract so it fits your situation. This is not as simple as some websites would have you believe. Often there are provisions in the model contract that, although not entirely appropriate for your situation, have legal consequences if they are not revised or removed. So although you may be tempted to believe that you can simply download the contract and start using it, that will usually lead to problems. An experienced contract lawyer will know what issues to address in modifying the contract and ensure that the contract achieves your objectives.
Just as important, the lawyer can also tell you when the model contract is not appropriate for your situation. You may think that all of your contracts should be governed by the laws of the state of Idaho, but if you are located in Delaware, do not have an office or other contact with Idaho, and the other party does not need to be governed by Idaho law, your lawyer will tell you that the choice-of-law provision is inappropriate. These decisions need to be made before you execute the contract.
It is also important to remember that you risk becoming a test case for courts and arbitrators when you go ahead and make changes to a model contract. You might do so because you are pretty sure that your interpretation of a particular contract term is correct. However, you should not assume that interpreting a contract term requires any particular legal skill. There are many factors that affect how a contract will be interpreted, and modifying a model contract may change how that contract will be read by a judge or arbitrator. Having a lawyer draft your contracts helps to minimize the risk of becoming a test case. That’s why working with an experienced contract lawyer is generally advisable rather than trying to "piece together" a contract out of several model contracts based on terms you have pasted together from competing models.
Getting Model Contract Samples
In the age of the internet, model contract samples are found everywhere. The question becomes, how does the average consumer know which samples they can trust and what the differences are between them? The Consumer Financial Protection Bureau has resources that help individuals find good model contract forms. They also review samples that have been posted online and create a list of good or bad samples. Another excellent source is Rocket Lawyer, which provides free model contract forms to individuals who sign up as, or are in the process of signing up as, a paid member. Another fine resource is the American Bar Association which provides many resources for individuals and solo practitioners. The American Bar Association also has a page that provides free hotlining and toll-free access to attorneys for the basic questions and concerns that many individuals and small businesses may have about legal issues. Both LexisNexis and Westlaw provide model contract samples but these services do not give out free model contract samples. Furthermore, the model contract samples that are available through these sites often expire and need to be renewed, meaning that only paying customers can continue to access them . There are other, non-related websites of varying reliability that provide free model contract samples. As with anything else, the accuracy and the quality of these samples will vary by the site that hosts them. Some other sources that can provide model contract samples that have often done the best job of providing high-quality free samples that are frequently updated are; UpCounsel, Law Insider, Lawtechie, Justia, Docracy, Legal Templates, Fundable, and Hire an Esquire. All of these sites have information about how model contracts are formed and what the elements of different types of contracts are, as well as links to other sample contracts. A few of these sites are focused on small business and the legal issues that small businesses may run into and provide high-quality sample contracts, but are not independently verifiable as the name would imply. Many of these sites also offer paid legal advice and consultation, as well as document review and even legal drafting. A final resource is Google Scholar which provides a number of model contract samples that have been vetted through the American Bar Association and other legal databases and firms.