Types of Business Contracts You Should Know About

You cannot do business without entering certain contracts or agreements, even though they are not always of a formal, written kind. We even encounter contracts in everyday life, for example when we make a purchase. When we hire a contractor, the basis is a contract, even if those are mostly in oral form. When we rent or lease a car, an apartment or some business or offices space, we enter into a contract. And when we hire an employee – that happens on the basis of a contract as well.

Business Contracts You Should Know About

If you conduct any type of business, here are some of the business contracts you should be familiar with.

business contracts

What is a contract?

According to “The Law Dictionary”, these are two definitions of a contract:

  • A contract or agreement is either where a promise is made on one side and assented to on the other; or where two or more persons enter into engagement with each other by a promise on either side. (2 Steph. Comm. 54.)
  • A contract is an agreement by which one person obligates himself to another to give, to do. or permit, or not to do. something expressed or implied by such agreement. (Civ. Code I,a. art. 1761; Fislc v. Police Jury. 34 La. Ann. 45.)

The form of a contract – in general – can be oral or written. In the context of a business (especially business-to-business), the agreements are often of a written kind, in order to create a reliable basis for all involved parties and to facilitate potential legal enforcement. For certain contracts, the written form is mandatory.

Types of/examples of a business contract/agreement:

  • Bill of Sale

A bill of sale is an agreement about the transfer of ownership in the case of a purchase. Depending on the nature of the purchased items (for example office supplies, a car, a copy machine or a piece of property) this agreement can be of a very formal and elaborate nature or can be as simple as retailer’s receipt. In business, it is likely that this is the kind of business contract you encounter most of all

  • Employment Agreement

If your business is of such a size, that you cannot (or simply do not want to) do everything yourself, you might want to hire people to work for you (i.e. employees). The employment agreement specifies the terms, i.e. among other points, the tasks/responsibilities of the new employee as well as their compensation.

  • Contractor Agreement

If you do not need a full-time staff member, but want somebody to work for you on a freelance basis and/or perform specific tasks like renovating your office space, you enter into a contractor agreement. One of the differences between a contractor and an employee is that the contractor is self-employed and therefore responsible for the payment of their own Social Security, income tax etc.

  • Nondisclosure Agreement

A nondisclosure agreement is a form of protection against the disclosure of private/confidential information covered by such an agreement. It can prevent employees, but also business partners, vendors etc., from disclosing company secrets or other confidential information they might become privy of while working for you/conducting business with you.

  • Lease Agreement

Office, storage, retail or any other business space is one of the typical subjects of a lease agreement a business owner comes across, but it might also refer to a rental car, a phone system or other items that you might not want to purchase, but simply use (while having to pay a specified fee) in the course of conducting your business.





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