A Detailed Guide on Business Contracts and Agreements

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Trusted Business Contract Lawyers

Learn the basics of business contracts and agreements, including why they are needed and what is required for them to be considered valid documents.

Blake Ledbetter Atlanta AttorneyAuthor: J. Blake Ledbetter, Partner, Conoscienti, Ledbetter & Archer

Mr. Ledbetter specializes in civil litigation in metropolitan Atlanta, Georgia, and possesses vast experience in wrongful death lawsuits. Mr. Ledbetter was recognized as a SuperLawyers Rising Star in 2018 and 2019 in the area of Civil Litigation. Published on June 13, 2022.

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Basics of Business Contracts and Agreements

Business contracts and agreements are vital for all types of businesses, whether small businesses, start-ups, or large companies. These types of contracts have been in existence since time immemorial. Let us look at the fundamentals of business contracts. These basics ensure that legal agreements are valid in court.

1. Offer – The desire and expression of willingness to enter into a contract. It demonstrates that your business is ready to accept contracts.

2. Acceptance – Unconditional agreement to the terms and conditions of the contract. The various types of acceptance are :

  • Conditional acceptance
  • Acceptance by action
  • Option agreement

1. Legality  Parties should bind themselves to business agreements in line with the state’s legal obligations.

2. Consideration  The contract becomes binding when the two parties exchange something valuable. It is money most of the time, but it can also be a service.

3. Mutuality  Business law requires that all parties agree and consent to the terms and conditions of the contract.

4. Capacity – The parties involved must have a good mental ability, be of legal age, and should not be under the influence of intoxicating substances when signing the contract.

Seek professional legal advice from a business contract lawyer. They will advise you on whether the contract is legally enforceable and explain your rights if there is a breach of contract.

What Are Business Contracts?

What Are Business Contracts

A business contract, also known as a legal contract, is a legal agreement that binds two or more parties or entities engaging in business. This written contract is enforceable in a civil court to align with the contract law. According to the law, a legally enforceable contract is a valid contract.

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Types of Business Contracts & Agreements

 

There are different types of legal contracts that you will use during your normal business operations. Familiarising yourself with the necessary business documents and agreements will help you run your business smoothly.

General Business Contract

General business contracts are legal agreements related to starting and running businesses. They cover the structure of your business and the protection of stakeholders. They include:

  • Partnership agreement – This mutual agreement clearly outlines business relationships between partners, their obligations, and contributions to the business.
  • Indemnity agreement – It is commonly known as a hold harmless agreement or no-fault agreement. The agreement involves two parties, where one party agrees to indemnify another individual or other parties for losses or damages that may result from a contract.
  • Nondisclosure agreement – It is a written agreement where the parties involved declare that they will not share confidential trade information with any other party outside the organization.
  • Property and equipment lease – An agreement where the property owner or equipment allows a lessee to use the property or equipment for a set period. The lessor receives payment in return. Small business owners can benefit from this agreement as they will use equipment and pay later.
  • Franchise agreement – An agreement where a franchisor licenses its intellectual property, business name, branding, and all the rights to sell goods and services and licenses to another business.
  • Settlement agreement – This is a binding business contract that settles legal issues without filing a lawsuit in court.

Employment Agreement

Hiring new staff can create liability issues for your company. Employment agreements give you control.

  • General employment contract – It is an agreement that outlines the relationship between an employee and employer, job descriptions, and any issues related to the work environment.
  • Independent contractor agreement – This agreement is also known as the freelance contract agreement. It outlines the scope of work, payment obligations, and independent contractors’ expectations. You are not responsible for tax obligations; therefore, you cant put restrictions on freelancers working with other businesses. What matters is that the contractors finish the job you assign them on time.
  • Non-compete agreement – It is a contract that forbids your previous employee from working with your competitors for a specific period. The contract should be clear on the timespan of a non-compete, the geographical location it extends to, and a list of competitors.

Sales Related Contract

This legal contract explains issues around the sale of goods, services, and property. The contract also outlines how to transfer a title. They include:

  • Bill of sale – A legal document that shows two parties have agreed on the terms of sale of a commodity or service.
  • Bill of lading – A legal document for two parties shipping freight that details the type of goods, quantity, and destination.
  • Purchase order – A legally binding contract that commits a business owner to buy an item at the agreed purchase price. A purchase order also outlines payment terms and delivery dates.
  • Statement of work – The statement of work outlines factors like scope of work, location, terms of payment, and expectations of the task.
  • Warranty – A guarantee that the product seller will replace or repair their product in case of damage.

The different types of contracts listed above are the most common to encounter as you run your business. Each of them is detailed and includes legal information. Therefore it’s recommended to hire a business contract lawyer with years of experience in contract law. Working with an attorney or law firm will help you understand the legal repercussions that you may face with failure to honor such agreements.

How to Make Solid Business Contracts and Agreements?

Creating a solid business agreement is an involving task. Use the following tips to make the process easy and fruitful:

  • Put the contract in writing – Written contracts are easy to prove and enforce in court than a handshake or oral agreement.

  • Use simple language – A good business contract is easy to read and comprehend. Using clear and straightforward language will bring out correct meanings for words.

  • Address all details – No matter how small and less critical an issue might seem at the moment, it is essential to make it clear to avoid misinterpretation in the future.

  • Specify the conditions for termination – Be clear on the circumstances that can lead to contract termination for both parties. This is helpful in the long run as it will prevent a lawsuit for a violation if you decide to terminate the contract.

  • Seek professional advice – Hire a trustworthy business attorney to provide legal advice on the agreement and ensure that you have everything right.

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    Importance of Written Business Contracts and Agreements

    PUT IT IN WRITING! is a phrase you need to remember any time you want to get into a business contract. It is usual for people to make business deals through word of mouth and seal it with a firm handshake. Handshakes work until everything goes wrong and crumbles. The first question your attorney will ask is, did you put it in writing?

    A written agreement provides tangible evidence for the jury and court during litigation. Memories fade away, but words in writing will never change. A written business agreement will give you solace when it is your word against the other party.

    Written business agreements help avoid litigation. All the terms and conditions of your agreement are documented. Therefore, if there is a dispute between parties, refer to the document to get the facts right. This will clear any doubts and misunderstandings and save a considerable amount of time and money that you would have spent in court.

    Hire a Business Contract Lawyer for Your Business Contracts

    The terms and clauses in a contract are critical to your agreements. They can have direct financial consequences for you and your business.

    It is essential for your contract to reflect your exact wishes, obligations, and expectations of the other party. Business contract lawyers can ensure that this is the case. They can help you draft, negotiate, and review your contracts to ensure that your interests are adequately protected. 

    Hire an Atlanta business contract lawyer to assist you with your contract needs. Contact Conoscienti & Ledbetter to schedule your free consultation.

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