Business Contracts Examples: Everything You Need to Know
Business contract examples may be found online and are a helpful resource for owners of small businesses. When you own a business, at some point you will need to complete and sign contracts of various types, particularly regarding laws, regulations, and liabilities.3 min read
Business contract examples may be found online and are a helpful resource for owners of small businesses. When you own a business, at some point you will need to complete and sign contracts of various types, particularly regarding laws, regulations, and liabilities.
Contracts take many forms. New employees have to sign agreements for the terms of employment such as payment and responsibilities, or in some cases, non-compete, non-disclosure, and other industry-related provisions. All contracts have the same basic parts, but are tailored to the type of business they are used for.
Other types of contracts are common to nearly all small businesses, such as purchase orders or the aforementioned contracts with employees. The main thing to remember is that written agreements are vital tools to protect yourself and your company.
Why Do You Need a Contract?
Once upon a time, business was conducted with just a handshake. However, in today's world, business owners need official business contracts. This prevents misunderstandings because it clearly outlines all expectations. A written contract is more likely to be enforced in court.
Common reasons for writing a contract include:
- Your product or service needs to be specific regarding material, size, or quality.
- There's a chance the client will not pay you after the job is completed.
- The project requires you to purchase materials or hire staff before the client pays you.
- You will be getting paid at specific intervals as the project is completed, or you will receive additional payment as a bonus if the project is completed early.
- Either you or your client needs information kept confidential, in which case a non-disclosure agreement needs to be signed.
- The regulations within your industry require a written contract to be executed.
- It's important to prevent any miscommunication between you and your client before you begin the project.
- In case of a dispute, you want to have proof of expectations in writing.
What Should Business Contracts Include?
Every business has specific needs when it comes to business contracts. In its simplest form, a contract is an agreement that a court will enforce in case a dispute occurs. Therefore, every contract should lay out the specific terms about the project to be completed, the expectations for the end result, the payment due, and the time when the payment must be made.
If you are selling a product, your contract should include items such as the date of the order, requirements for delivery and acceptance, quantities, guarantees, and payments. If you are providing a service, your contract may include dates of performance, the actual work that will be done, and the payment due.
These are the basic items that need to be in a contract:
- The product or service that will be offered.
- The compensation that will be given in exchange, which is usually money but may also be something else.
- A signature indicating that both sides agree to the terms.
- A signature indicating that both sides agree to all of the conditions and understand that a binding contract is taking place.
You should also include:
- All information about both parties, such as names and addresses.
- The dates for starting and ending the contract.
- The definitions of any important terms that will be used.
- The specific services or products that will be provided or received.
- Details about payment, dates payment is due, or any partial payments that need to be made.
- Fees or interest charges that will be assessed for late payments.
- Requirements for insurance or other liability coverage.
- The process for resolving disputes.
- Any other special situations the contract needs to include.
When sales take place, there are several types of contracts that may be issued. These include:
- Bill of Sale, which transfers an item's ownership.
- Agreement for the Sale of Goods, which specifies the terms of the sale and is often followed up by a bill of sale.
- Purchase order, which is the first offer a buyer makes to a seller.
- Warranty, or any guarantees or promises, as well as conditions that would make the contract void.
What to Do Before You Sign a Contract
Before you agree upon a contract and sign it, you need to read it through carefully. Make sure that all information is what you agreed to verbally, and that all the details are correct and spelled right. Check to see if there is any confusing language that might cause a problem later. If there are any terms that are unfamiliar, make sure you understand them.
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