Legal Contracts for Business: Everything You Need to Know
Legal contracts for business include any contract that can be legally upheld in a court of law.4 min read
Common Legal Contracts for Business
Legal contracts for business include any contract that can be legally upheld in a court of law. For a contract to be legally upheld, it must contain a clearly stated offer by one party that is accepted by another party with both parties acknowledging intent to enter into an agreement that is legally binding. Not all contracts need to be put to writing or signed by both parties for them to be legal—verbal and implied contracts do exist—but writing and signatures are highly recommended for clarity and legal enforceability.
Common legal contracts you may encounter include:
- Business contracts. These are used to lay out the terms of business deals involving the buying or selling of goods or services by a business, as well as to allow individuals and independent contractors to make formal business agreements. For products, these allow you to set out details like order amounts, delivery dates, payment details, and warranties, while for services you can define the terms of the service, when it should be completed, and what compensation will be due. These can be customized to suit your business needs.
- Service contracts. Whether you are providing or contracting services, these contracts can be used to specifically define the terms of the services to be provided or received, including such details as length of service, price, and other obligations. Using these will establish a professional relationship between parties and help to forestall future misunderstandings or legal troubles.
- Independent contractor agreements. These are used to set out terms with consultants, freelancers, or other short-term employees. They are similar to employment agreements, but instead only outline terms of work on a project-to-project basis.
- Liability releases. These are used to absolve your business from legal liability for damages or injuries sustained by parties participating in activities sponsored or run by your business. Organizers, hosts, or sponsors of events may want to have participants sign these before activities begin, especially if there is a reasonable possibility of danger in such activities. These agreements are also commonly referred to as waivers since the signer waives their right to sue in the event of injury. Gross negligence, however, is often not covered by a release.
- Equipment leases. If you plan to lease equipment to or from another party, this agreement will secure the terms of that lease before the equipment is transferred. Details like what equipment will be leased, who is responsible for repairs or injuries related to the equipment, how long the equipment will be leased for, and what the equipment may be used for are covered by this document.
- Real property leases. This is a contract to lease commercial, manufacturing, or office property from a landlord to a business. This document will define the parties involved in the lease, the rent rates, and time period of the lease, as well as what conditions and terms a tenant must keep to maintain the lease.
- Non-disclosure agreements. Also known as NDAs, these are useful to keep parties from disclosing the trade secrets or other confidential information of businesses to third parties. These are commonly offered to employees, potential employees, or independent contractors. Unilateral non-disclosure agreements bar one party from disclosing confidential details; mutual non-disclosure agreements bar both parties from disclosing such details.
- Provisional patent applications. These offer protection for your invention or product before patent protection comes into effect. By making a provisional filing, you can use the term “patent pending” before a patent filing date and thereby prevent others from profiting from your work.
- Non-compete agreements. These are used to prevent former business partners or employees from competing against your business. These usually have time, geographic, or subject/market limitations; blanket non-compete agreements are not guaranteed to stand up in court.
- Employment agreements. These specify the obligations and rights of salaried or full-time employees. Such agreements clearly define the relationship between business owner and employee, including details on salary, hours, benefits, and confidentiality. These are also known as employee contracts or job contracts.
- Employee handbook. This will set out rules and guidelines for employee conduct in the workplace in order to maintain a healthy, positive, and safe work environment. This can be useful no matter the size of your business, as it will standardize and clearly define the conduct that you expect from your employees. By signing this document, an employee attests that they understand what is in the handbook and that they will honor it.
These are just some examples of the many business contracts you may encounter, each offering many variations depending on the scenario they pertain to. If you need help understanding legal contracts for business, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.