Business contracts govern everything from sales agreements to property leases. Though verbal agreements can still be legally binding in certain circumstances, it’s in the best interest of all involved parties to create a solid legal contract for both to review and sign.

A legal contract removes many of the potential issues that could otherwise occur when dealing with business contracts, such as misinterpretations and miscommunication.

What Are the Different Types of Business Contracts?

At its simplest, a business contract is generally any legal agreement between a business and anther party. A business may agree to lease a space to another business in return for a specific amount of rent. A business may also agree to merge with another business with a variety of stipulations intact.

Any time there is a quid-pro-quo between two businesses, an agreement has been established and a contract has been made. Other common examples of business contracts include:

  • Advertising contracts
  • Arbitration agreements
  • Loan agreements
  • Consulting agreements

Not only should you always involve an attorney in drafting your legal contracts, but you should also have an attorney review contracts that are presented to your business. Most contracts are quite lengthy and the actual implications of some of the requirements may not be initially clear.

When businesses use boilerplate contracts—such as contracts they have discovered on the Internet—it’s often possible that the contract itself may include stipulations that are either not allowed in your state or are overridden by state law.

Why Would You Need a Business Contract?

A business contract defines the expectations for all involved parties in a clear way, thereby making it easier to ensure that all parties live up to their obligations. This is true even if both businesses trust each other and have maintained a solid working relationship in the past.

Business contracts also outline ways to mitigate damage and resolve problems, such as through a third-party mediator. Essentially, a business contract is designed to clarify the actual terms of an agreement and the consequences for not meeting them, even though both parties may already have a general sense of how the agreement is devised.

There are always unexpected events that could occur. If one party fails to live up to the contract, the contract can be used in the court of law to show that they have failed to meet the terms. Without a legal contract, there is often no evidence that an agreement ever existed.

With a verbal contract, not only can the contract itself be potentially denied, but the details of the contract will certainly be difficult to prove. In the case of monetary contracts, such as loans, a contract itself may be necessary to show investors, shareholders, and any relevant financial institutions.

Business contracts are absolutely essential for businesses looking to protect themselves from harm. Through the use of a business attorney, business owners will be able to ensure that their agreements are upheld and that they know exactly what to do in the event that an agreement is broken.

A proper business contract can save a business owner both money and time. If you have business contracts that you want either drawn up or reviewed, contact us at Saraiya Pllc today.