Contracts a New Business May Need
Businesses need contracts. Well-drafted contracts protect a business’s rights and help prevent legal disputes by establishing clear expectations between a business and its customers, employees, vendors, and partners. Below are some of the most common contracts that a new business may need.
Operating Agreement
If a business is structured as a limited liability company (LLC), it needs an operating agreement. An operating agreement is a binding contract between the members (the owners) of an LLC that details, among other things, management structure, the roles and responsibilities of members, voting rights, profit distribution, and procedures for adding or removing members.
Shareholders’ Agreement
A shareholders’ agreement is a contractual arrangement among the shareholders of a corporation. This agreement supplements the basic organizational documents of a corporation, such as the certificate of incorporation and bylaws, by establishing additional shareholder rights and obligations.
Service Agreements
Service agreements can be important for businesses that sell services to clients. A service agreement outlines the scope of the services to be provided, service provider obligations, client responsibilities, pricing, and more.
Sale of Goods Agreements
A sale of goods agreement defines the terms of sale between a buyer and seller. It typically includes the price, quantity, and description of the goods, as well as delivery time(s) and place, payment terms, risk of loss, and warranties.
Website Terms of Use
If a business sells a product or service through its website, it may benefit from a terms of use on the website. A terms of use details the rules for accessing and using the website and helps a business limit liability, safeguard intellectual property, and prevent illegal activities.
Employment Agreements
An employment agreement outlines terms of employment. It can include provisions like employment duration, compensation, termination notice requirements, benefits, bonuses, arbitration agreements for dispute resolution, and more.
Nondisclosure Agreements
A nondisclosure agreement (NDA) outlines confidential information that the parties wish to share for certain purposes but want to restrict from wider use or dissemination. NDAs are often used to protect sensitive information in business transactions and employment relationships.
Licensing Agreements
A licensing agreement allows the owner of intellectual property (IP), such as a trademark, copyright, or patent, to grant another party the legal right to use that IP for commercial purposes typically for a fee. A licensing agreement generally includes the definition of the licensed mark, goods and services and geographic territory the license covers, licensed uses, restrictions on trade or distribution channels, and whether the licensee can sublicense any of its rights.
Commercial Lease Agreements
If a business leases a retail, office, warehouse, or some other type of commercial space, it will need a commercial lease agreement. A commercial lease agreement includes the landlord and tenant’s rights and obligations for the duration of the lease.
A business may not need all the contracts listed above, but having the necessary contracts will help a business build a solid legal foundation.
The text above is intended for informational purposes only and is not legal advice. For advice tailored to your situation, please consult with an attorney.