Common Types of Business Contracts

There are many types of contracts businesses can be involved with. Here are some of the more common ones that business owners will need to consider:

Contracts Between Employees and the Employer

Employment contracts are a necessary component of hiring employees. They clearly outline the employee's responsibilities and expectations, providing a clear job description that parties can rely upon in the event of a dispute. The agreements outline the employee's salary requirements, the scope of the work, and offenses for which the employee can be terminated.


Employees are frequently presented with proprietary information including sensitive customer data, data on developing projects, and corporate strategies. Employers will often require employees with access to sensitive data to sign non disclosure agreements. These preclude an employee from discussing or disclosing certain matters to individuals outside a designated set of parties. This protects employer investments in research and development and helps thwart corporate espionage.

Similarly, employers may demand that employees sign non-compete agreements. Non-compete agreements generally preclude an employee from working for employers within a specific industry, time frame and geographical region. These agreements are controversial and courts often will only enforce portions of the agreement, if they enforce it at all. A reputable business law firm can help employers draft effective non-compete agreements that will hold up in court.

Contracts Between Customers and Employer

Businesses frequently sign contracts for the sale or purchase of goods or services. Even straightforward purchase agreements or sales orders will have staggered delivery times and payment schedules. Businesses will also sign agreements to develop certain products. Some of these agreements will be contingent upon the buyer's satisfaction with a sample product or contingent upon the delivery of a good or service to the buyer or seller by a third party.

Larger and more complicated contracts can pose a wide variety of issues, including poor drafting, intervening acts, and issues with respect to the Statute of Frauds. Business law firms can help small business owners avoid such issues. Distribution agreements are rife with the potential for ambiguous wording and unclear descriptions of each party's duties. Licensing agreements can frequently span across borders, requiring attorneys specializing in international law to ensure that the agreement remains enforceable in both countries.

It's easy to make mistakes in business. Contract reuse and downloading existing legal forms without adapting them to a particular situation often causes contractual disputes and issues over drafting language. Competent legal counsel is critical, as business law firms can guide clients away from expensive mistakes.



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