• Purchasing equipment (computers, organs, furniture)
• Services (painting, roofing, architects, remodeling)
• Using hotels or conference centers

• Definition of a Contract
• Function of a Contract
• Types of Contracts
• Terms to Include in Contracts
• Amending an Existing Contract
• Dispute Issues
• Important Tax Information
• Sample Independent Contractor Contract Form —
• Sample Form of Honorarium Letter —

One common misconception some have is that a contract must be written to be valid. Generally, oral agreements that have competent parties, subject matter, legal consideration, mutual assent, and mutual obligation to perform constitute legally binding contracts. There are, however, certain types of contracts that must be in writing in order to be legally binding, and, if you have any questions regarding whether a particular contract must be written, it is always best to consult an attorney in your jurisdiction. A written contract is generally preferable because the terms exist in "black and white" instead of merely in the parties' minds.

The following are examples of types of contracts churches may encounter:

1. Purchase Orders are generally used for items such as office supplies, printing, and computer equipment. Terms and conditions (which typically favor the seller) are preprinted on the form. Remember: You can negotiate these terms if you desire.
2. Honorarium Letters are used for services of limited duration rendered by an individual for which no set standard of quality is to be dictated and which does not include the creation of a copyrightable work. Examples of such services are one-time speeches, lectures, teaching engagements, and musical or other performances. A sample form of honorarium letter.
3. Independent Contractor Agreements are used for services rendered by an individual. For such an agreement to be entered into, the services performed by the individual must meet the common law rules which determine whether one has been properly classified as an independent contractor as opposed to an employee. In making the determination whether one is an independent contractor or an employee, all information which provides evidence of the degree of control and the degree of independence should considered. Three categories of consideration will provide evidence regarding the degree of control and independence. They are: behavioral control, financial control, and the type of relationship of the parties. The IRS publication titled " Independent Contractor or Employee provides examples of these categories and the proper classification in certain situations. Another helpful IRS publication which provides similar information but does not require Acrobat Reader to view. Some examples of services provided pursuant to such agreements are: video production, manuscript acquisition, and production or consulting services. Sample Independent Contractor Contract Form
4. Specialized Contracts are used for services rendered by individuals or companies. Specialized contracts may be drafted when no other form of agreement (i.e., purchase order, independent contractor agreement) fits the situation at hand. The types of services that may be provided under such an agreement are similar to the types of services that may be provided pursuant to an independent contractor agreement.
5. Hotel and Conference Contracts are used for providing accommodations for meetings and conferences. These agreements are types of specialized agreements. Generally, the hotel or conference center will have a form contract that it will provide. However, you should review this form and negotiate any revisions you deem necessary for your event as well as the financial well-being of your governing body. For example, look for oppressive, one-sided cancellation, indemnity, and attrition clauses as well as clauses regarding overflow of rooms at off-site locations, clauses concerning the hotel or conference center's responsibilities pursuant to the Americans with Disabilities Act, and clauses requiring large advance deposits. Also be aware you may need separate transportation, catering, audiovisual, or parking contracts. Finally, given the current political and security situation review the contract's "Acts of God" clause, paying special attention to whether it may be canceled due to terrorist acts or government imposed state of emergencies.

1. the legal names of the parties and their addresses,
2. start and end dates,
3. whether the contract is renewable,
4. a clear statement of the services or product to be provided,
5. a clear indication of the cost of the service or product including any installment payment schedules,
6. a clear statement of the ownership of any copyrightable material,
7. a clear statement regarding whether any expenses shall be reimbursed and, if so, to what level,
8. the parties' taxpayer identification numbers (for a corporation this is its employer identification number),
9. a clear statement regarding termination,
10. a clear statement regarding warranties provided, and
11. a clear statement of how any potential disputes will be resolved (i.e., arbitration, mediation)