Common Business Contracts
While all valid contracts must include certain elements -- particularly an offer, consideration, and acceptance -- there are several different kinds of contracts addressing various business scenarios. Most small businesses will end up using the same kinds of contracts at various times, such as employment contracts or purchase orders, and will become quite familiar with these. To get a sense of what contracts typically look like, you may want to check out our collection of real-life business contracts used by some well-known corporations.
Some of the more common types of business contracts that you may enter into are included in the following list.
- Bill of Sale - Transfers ownership of a good from one party to another
- Agreement for the Sale of Goods - A contract for the sale, may be confirmed by a bill of sale after the transaction goes through
- Purchase Order - First official offer made by a buyer to a seller
- Warranty - Any conditions or actions that would void the contract
- Limited Warranty - Warranty limited to just one or a few parts
- Security Agreement - Contract between a lender and borrower of a loan
- Employment Agreement - A contract for employment, including details about payment, job responsibilities, etc.
- Employee Noncompete Agreement - An agreement to not work for a direct competitor for a specified period of time after termination
- Independent Contractor Agreement - Similar to an employment agreement, but outlines the terms to which the limited work contract applies
- Consulting Agreement - Outline of the tasks and responsibilities (and compensation in return) for a consulting relationship
- Distributor Agreement - Defines the relationship with a distributor
- Sales Representative Agreement - Typically used to define the amount of commission, and how it's tabulated, for a salesperson
- Confidentiality Agreement - Agreement to not disclose certain information to third parties
- Reciprocal Nondisclosure Agreement - Nondisclosure agreement in which both parties agree not to disclose certain trade secrets
- Employment Separation Agreement - Also referred to as a termination agreement, this formally ends the employment relationship
- Real Property Lease - A contract to lease office, manufacturing, or commercial real estate between the landlord and the business
- Equipment Lease - Agreement to lease equipment for a specified period of time
General Business Contracts
- Franchise Agreement - Outlines the relationship between the franchisor and the franchisee, such as support, advertising, use of brand, etc.
- Advertising Agency Agreement - Establishes the scope of duties to be performed by the agency, duration, payment, etc.
- Indemnity Agreement - An agreement to transfer risk from one party to another
- Covenant Not to Sue - One party claiming damages agrees not to sue the responsible party
- Settlement Agreement - Agreement between two parties to end a lawsuit in exchange for certain concessions (usually cash paid to the plaintiff)
- Release - Typically refers to a release from liability (which are common for businesses where customers assume a reasonable risk of some sort)
- Assignment of Contract - A legal transfer of the benefits and obligations of a contract from one party to another
- Stock Purchase Agreement - Contractual agreement to sell a certain amount of stock to a name individual (often used for stock options at private companies)
- Partnership Agreement - Official agreement among two or partners, including responsibilities of each
- Joint Venture Agreement - Lays out the obligations, goals, and financial contributions of all parties involved in a joint venture
- Agreement to Sell Business - Documents the terms of a business sale
Consider Talking to an Attorney Before Entering Into a Contract
Businesses and their senior managers typically draft and sign a staggering amount of contracts with customers, partners, investors, suppliers, and others with which they conduct business. Sometimes it's as simple as a bill of sale, but other contracts can be quite complex. Before you agree to something with a high dollar amount, make sure you completely understand the terms. It's often a good idea to meet with a business and commercial law attorney, who can break down the terms and help you make the best decision.