Legal agreements, called contracts, are essential for successful business relationships. Contracts help to provide clear parameters for fulfillment of required work or other actions. They also offer protections for both parties if unusual circumstances should arise. Entrepreneurs should educate themselves on the features of common business contracts and engage a business attorney, when necessary, to ensure their legal interests are properly protected when they enter into contracts.
Businesses frequently must enter into commercial lease agreements to provide a physical location for their enterprise. State laws generally dictate the terms of these leases, which often include the location and description of the premises, the amount of rent, terms of the lease, terms for renewal, capacity for parking, requirements for signage and security requirements.
Bills of Sale
Bills of sale are generally used to transfer legal ownership of property. These contracts may be used for equipment, vehicles, or other physical property. Bills of sale generally describe the property to be transferred, as well as the purchase price. This information can be important in proving whether merchandise has been delivered or the purchase price has been paid in full.
Nondisclosure agreements may be used for a variety of purposes. These agreements may protect proprietary information during quotation of jobs, during manufacture of parts or when joint ventures are being considered. Information covered by the non-disclosure agreement should be defined clearly to ensure proper compliance for all parties. Some exclusions may be provided in the agreement, such as for information provided by a third party not covered by an obligation of confidentiality, for information in the public domain and for information already disclosed before entering into the agreement.
Some types of business may be required to enter into manufacturing contracts to produce various parts to another company. These contracts may include information about quality measures, delivery schedules and other requirements that are necessary for ensuring the proper execution of the contract. Penalties for failure to comply with the contract are also included.
High-level executives and key personnel of a company may be required to sign employment contracts when high salary levels and proprietary information may be at stake. Employment contracts generally define the terms of employment, compensation, final compensation at termination, restrictions on competition with the company and methods of having disputes arbitrated.
Government contracts are often deemed to be highly desirable for business, because they often mean long-term work with clear requirements. However, government contracts may include stringent compliance criteria that can add significant expense to the job. Business owners that do business with the government should consult with an attorney who can help them decipher the often-confusing language of government contracts. They should also be fully aware of the consequences if they breach the contract.
Franchise agreements to operate established brand name businesses can be very complicated and involve both federal and state laws. Any businessperson interested in engaging in a franchise agreement should consult with an attorney who is experienced in these agreements. Franchise contracts generally include requirements for using the, name, trademark or logo of the franchise; payment of fees to join the franchise; legal requirements for use of products, ingredients or other matters determined by the franchise; and the parameters of control over the individual business by the franchise. Because these requirements are often very restrictive, legal counsel is critical to the entrepreneur.