How to Write a Payment Agreement Letter
When writing a payment agreement letter, you will need to follow a few guidelines. First of all, make sure you use a proper format. It should include a space for a signature and a place for witnesses to sign. In addition, it must be accurate. There are two main types of payment agreements: a lump-sum payment and a payment plan. While the information at the start and the end of both types of letters are similar, the information within the body of the letter will differ.
Include a severability clause
Severability clauses are provisions in a payment agreement that will terminate if one part of it is invalid or unenforceable. If the clause does not apply to a specific part of the contract, it may be unnecessary or may even be harmful. It builds a potential controversy into the document, which is nugatory at best and pernicious at worst.
Severability clauses should never be inserted without the parties discussing its ramifications. Severability clauses typically require a court to “sever” the unenforceable portion from the rest of the contract. Therefore, it is important for both parties to discuss whether they are comfortable with severability. For example, they should discuss whether the contract will remain in force after a certain provision is stricken, and what impact this could have on the other parties.
Severability clauses are commonly found in construction contracts and are often modified to meet the unique needs of a particular project. They should identify certain terms in the contract that are essential, meaning that if one part is invalid, the contract as a whole is null and void.
A severability clause can also be used to prevent ambiguity in a contract. It explains what will happen if one part of a contract is rendered unenforceable. Usually, a severability clause contains reformation or saving language. In other words, the unenforceable part of the contract will be amended or deleted, but the rest will still remain in force.
Another type of severability clause is a boilerplate clause. This clause is intended to make the parties work together to complete a contract. For instance, a boilerplate clause might state “each party covenants to take all actions necessary to complete the contract.” But this provision could be deemed unreasonable or capricious.
A severability clause provides a safety net in case a court or arbitrator finds a provision to be invalid. The invalid part will be replaced by a valid one that accomplishes the primary intentions of the parties.
Include a notary block
If you use DocuSign, you can include a notary block in your payment agreement. However, do note that DocuSign cannot guarantee that the Notary Service will always work. DocuSign also has the right to remove or change the functionality of the Notary Service at any time.
Some states require that a notary public sign a payment agreement. You can find a notary at the courthouse, a large bank, or a city manager’s office. In most states, a notary must notarize the agreement before it is legally binding.
A notary cannot make any statements about a party’s ability to enforce this document, so it is important to choose a notary with good standing. This will prevent your payment agreement from getting invalidated or rejected. In addition, DocuSign does not offer phone support or updates.
Include a due date
When creating a payment agreement with a client, you need to consider the relative due date. This date is calculated once the project contract has been signed. It will typically display as “TBD” until the client signs the contract. Then, you can set a relative due date for the first payment.