Business contracts are a part of every company’s life, whether they choose to deal with them personally or through a specialized company.
There are plenty of different types of business contracts out there that work in various ways. Some are simple while others are complicated, some revolve around people, others around things. But how can you identify the different types so you know what you’re dealing with?
Top Five Most Common Business Contracts:
One of the most common type of business contract, that any business should be familiar with, is a Bill of Sale contract.
1– A Bill of Sale contract is an agreement between two entities that states who owns a piece of personal property, as well as what the property is, when it was sold, how much it cost and who it was sold by. This type of contract is also commonly used to legally recognize ownership and identify the owner of a certain property.
2– If you are going to hire employees for your company (let’s hope you are!) you will need to have an Employment Agreement. This type of contract legally sets out the terms and conditions of a person’s employment. This can include how much they will be paid, how many hours they’re expected to work per week, what kind of bonuses they can earn and reasons that they can be terminated.
3– If you have a product to sell, which seems like a fairly smart thing to do if you’re in business, then you will need a Licensing Contract. A Licensing Contract is an agreement that allows you to earn money from your invention or creation by allowing someone else to use it. This type of agreement can serve and an outline terms such as how much they will pay, restrictions of use, reproduction rights and exclusivity of the product. This is a great way to monetize your intellectual property when you need another person’s help to do so.
4– When collaborating with others you should also make sure that you are legally covered by a Nondisclosure Agreement, which can be used for vendors, clients or potential employees. A Nondisclosure Agreement protects your confidential information and can give you the right to seek legal action if the other party discloses information covered by the agreement.
5– The last, but not least, amongst the business contracts we’ll talk about today is the Promissory note. This is a legal type of IOU. It can be used if someone wants to borrow money from your company. The note becomes a legal record of the loan, and states the terms of repayment as well as the interest rate and any penalties associated with late or non-payment.