Almost every business owner will engage in a contract at some point in time. A contract is an agreement between two or more parties that legally binds each party to uphold their end of the bargain. If one party breaches the agreement, the others may hold that party legally liable for any damage caused in court. Contracts are highly important in business to protect owners and ensure legal recourse if someone does not perform as promised.

Common Business Contracts

Though each company will utilize different types of contracts in its usual course of business, there are certain contracts that are commonly used by business owners. Some of these include:

  • Employment agreement—Though California is an at-will employment state, business owners may still want to have agreements between themselves and employees regarding other key terms of the employer-employee relationship to avoid later conflict.
  • Nondisclosure agreement—Commonly known as an NDA, this type of contract prevents other parties, such as employees, clients, or vendors, from disclosing confidential information regarding your business practices and sensitive matters.
  • Contract for the sale of goods—Whether you are a vendor or a retailer, you should always have a written contract for any sale for goods worth more than $500, including description of the goods and payment and delivery terms.
  • Leases—Whether you are the lessor or lessee, and whether the leased property is equipment, a warehouse, or a storefront, a lease agreement is vital to the rights of all parties.
  • Partnership Agreement—If you have a partnership with one or more other parties, it is always important to set out the terms of the partnership in writing to avoid conflicts.

The above are only some types of contracts commonly used in business. Also important to understand how to create an enforceable contract that adequately protects your business.  First, it is always a good idea to get the agreement in writing and make sure it is signed by all the parties. Make sure every detail of the agreement is in writing, including how you are going to resolve disputes should they arise.

Finally, always read every term of every contract and ensure you understand its meaning and how it will affect your business. Never hesitate to consult with an attorney regarding a business contract prior to signing anything.



- Claire Kalia


Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.