The Five Contracts Your Business Should Have
As a small business owner you likely enter into contracts on a daily basis. With your suppliers, your distributors, your employees. When a party doesn’t perform, the contract should be the first place you look to determine your rights, obligations, and remedies. These are the written contracts every business should have.
1. Entity Formation Documents
Your Corporation, LLC, or Partnership must have bylaws, an operating or a partnership agreement. This is particularly important if you have partners or investors. These documents must be in writing and correctly reflect any agreements made. Do not rely solely on verbal agreements; it is important to formalize these agreements into a written document. If a dispute should arise each party will inevitably have a different recollection of the agreement. Having a written document to refer to may quickly and easily resolve a dispute.
2. Sales Agreements or Bill of Sale
This is an agreement you send to every new client. It should have details about your transaction; including price, delivery time, and a description of the item or service. You should also include any policies you have, such as returns and warranty.
3. Non Disclosure Agreement
Protect your business assets, namely trade secrets and client lists, from disgruntled employees and your competition. A non-disclosure agreement prohibits an employee, former employee, or anyone you do business with from revealing confidential information about your business. The agreement should define the information to be kept confidential, obligations of the receiving party and the time period for which the information is to remain confidential.
4. Real Estate Lease
Generally, real estate contracts, sales, and leases need to be in writing to be enforceable. While there are some exceptions, namely a lease for less than one year, it is a good idea to have all leases in writing. Your lease should detail who is responsible for maintenance, who owns any improvements made by the tenant, and who is responsible for taxes and utilities.
This post is for informational purposes only. It is not intended to be, nor should it be construed, as legal advice. Always consult an attorney, licensed in your state, before taking legal action.