What Are the Different Types of Business Contracts?

The business world today continues to be quite competitive. Due to this, every business decision that you make needs to be done so with proper thought and diligence. An important part of completing any type of transaction is to ensure you have a proper contract in place that will spell out the responsibilities and consideration provided by all parties. This will be done through a variety of different business contracts and agreements. There are many forms of business contracts that you should be aware of in particular that you may be required to sign from time to time.

Partnership Agreement

Anytime you are creating a new business, having a skilled partner by your side is very important. Through a business partnership, you can benefit from the experience, access to capital, and overall business acumen that all partners possess. If you are going to find a partner for a business, it is important that you have the full partnership documented in a partnership agreement. These documents will outline the ownership shared by each individual, what responsibilities and contributions each partner have, and how voting and decision-making will be made. These contracts can help make it easier to keep the creation of your business organized.

Lease Agreements

When you are looking to grow your business, there are bound to be assets that you will want to lease. Some items that you may need to lease for a company can include an office, warehouse, or other place of business, vehicles, and other major equipment. Both the lessor and the lessee will sign a lease agreement. The document will spell out all rights and responsibilities including the monthly lease rate, responsibilities that both parties have in terms of maintenance and repair, and when the lease term ends.

Indemnification Agreement

An important agreement that a business will need to sign from time to time is an indemnification agreement. With one of these agreements, one party is indemnifying the other which typically means they will not hold the other party liable if an accident occurs that results in injuries. These agreements are commonly signed when purchasing certain products or services that can come with some risk. It is common for a business owner to be on both sides of these agreements at some point.

Purchase and Sale Agreement

Eventually, your business will want to make some major purchases and investments to keep your organization growing in the right way. A purchase and sale agreement is usually a highly negotiated agreement that will spell out all terms of the sale. This will include having exact detail over the asset that is being sold, the price and consideration for sale, and what steps need to be followed during the purchase and sale process until the transaction closes. There may also be responsibilities set forth to help ensure a smooth transition of the asset sale warrants it.

Employment Agreements

One of the most important assets that a company can have is a quality employee. At the same time, a company is making a big commitment whenever they hire someone new. When hiring a senior level person, there can be more complicated parts to the employment agreement. These agreements will typically spell out the expected compensation including salary, bonuses, stock, and employee benefits. They may also include provisions for what happens when the employment comes to an end including severance pay, vesting of stock or options, and even non-compete language. There are also agreements that are designed for independent contractors that may be brought in to handle very specific tasks for a shorter duration.

Non-Disclosure Agreements

An important document that may be signed from time to time is a non-disclosure agreement. These documents typically outline certain events that parties of the agreement are not able to discuss publicly. A non-disclosure agreement is often signed following an accident or other form of negligence that results in a lawsuit settlement. The organization being sued may be willing to settle for a certain level of compensation as long as the recipient is willing to sign the NDA. These agreements can last for life and will outline what is not to be mentioned or acknowledged and what the compensation will be.

Commercial Loan Agreement

At some point, most companies are going to take out money to grow their business. Business loans can be used for many purposes including buying a place of business, equipment, or other investments, or taking out a loan that will be used for working capital. The commercial loan agreements will include many business points including the interest rate, amount borrowed, monthly payment, fees, and outline collateral. Some may also have a variety of covenants that the borrower needs to follow and meet, which are not limited to hitting certain financial performance milestones.

Commercial loan agreements will also frequently include other related documents that the bank will require you to sign. These agreements can include security agreements that specifically outline collateral, note repayment agreements, and even personal recourse agreements. You may also have additional documents and contracts to sign related to commercial bank accounts and bank account management that you maintain with the financial institution.

Service Contracts

The most important contract of all that a business needs to ensure they have drafted properly is a service contract. A service contract is a written agreement that will outline the services that the company is going to provide, when they will be provided, what the compensation for service will be, and when compensation for the services will be due. This contract will need to be detailed to properly identify all work that will be completed as well as what responsibilities each signer has. These agreements are typically signed whenever providing any service to a new or existing customer. No matter what type of contract you need to prepare or review and sign, having legal representation by your side is very important. Houston attorney Andrew Weisblatt can provide a variety of services that can help to ensure that the contract you prepare is done so in accordance with law and is valid. He will be able to work with you throughout the course of the contract drafting to ensure it is prepared to meet the expectations of whatever agreement you have. This can ensure that your transaction goes smoothly, and you are happy with the result.

Image source: Shutterstock.com