Business contracts do more than put terms on paper. They set the rules, protect your interests, and keep operations running smoothly. This is why having the right legal framework is vital as it shields your business from disputes, liabilities, and unexpected risks. Understanding the different types of business contracts ensures you are covered in every scenario, whether safeguarding confidential information, defining purchase terms, or setting partnership rules.
Subcontractor Agreement
Where you are using subcontractors in the course of your business, you should always ensure you are complying with all applicable regulations, as well as reducing the chance of something going terribly wrong. By having a subcontractor agreement in place, your subcontractor can then understand what is expected of them and, more importantly, what will not be tolerated.
NDA/Confidentiality Agreement
Where you are working alongside a party, whether this is as a client, a supplier, for a joint venture, or otherwise, it is important to protect any information you wouldn’t like to become public. At the very least, a basic non-disclosure/confidentiality agreement can set out what information will be considered confidential under the contract, as well as another parties contractual obligation to protect that information.
It is, however, impossible to exclude all opportunities for disclosure, as a party is permitted to disclose confidential information where:
- expressly required by law;
- such information has come into the public domain and this is not due to the breach of the agreement by that party; or
- it was already known by that party at the time it was disclosed.
The above should be included in an agreement in order for it to remain lawful. However, regardless of this, you are still dramatically reducing the ways in which another party can disclose your confidential information.
Terms of Use/Website Terms and Conditions
Though you will likely be aware of the UK GDPR, are you confident you are complying with your obligations as a business under this? If you have a website in the name of your business, it is likely you will need at least a basic terms of use document, with the contract applying between the user of the website and your business.
At a minimum, this should include information on the intellectual property rights in any content on the website, how/where users are permitted to link to the website, third party websites that may be linked within your website, disclaimers on information and content, a fair use policy (if applicable), liability, law and jurisdiction, and any age requirements.
Terms and Conditions of Purchase
Purchase terms are a great thing for businesses to incorporate when they are purchasing goods and/or services in order to ensure that the terms of the contract are not overly unfair.
Generally, this type of contract would include clauses around:
- Basis of Purchase
- Delivery Times and Estimates
- Payment
- Risk and retention of goods (where applicable)
- Termination
- Intellectual Property (where applicable)
- Warranties and Indemnity
However, contracts like these are usually subject to what is known as “the battle of the forms” – where two parties (generally the seller and the buyer) argue which of their respective terms and conditions apply. This typically occurs where both parties have stated that their terms prevail – but which would really take precedence?
The answer is that there isn’t an answer – both parties will need to negotiate and agree what they are and are not willing to accept under the contract. This can be an incredibly frustrating process, but it is important to not lose sight of your non-negotiables, and to know that, so long as you do not accept the supplier’s terms and conditions, you are not obliged to enter into a contract you are not comfortable with.
Terms and Conditions of Sale
As you will likely know, these are absolutely crucial for a business when providing goods and/or services. By having a complete and relevant set of terms and conditions to provide to your clients, you have an easy way to inform them of all relevant information instead of doing this verbally.
There is a common misconception that terms and conditions need to be worded in a complex way. However, as with other types of business contracts, this is completely untrue. Providing only that they comply with the law and are updated when necessary to match any changes to this and/or your business, generally the easier they are to understand, the less questions you will have to answer from your clients.
Having robust terms and conditions also has the added benefit of being able to keep everything in writing should any issues arise further down the line.
Partnership Agreement
If you are aware of a partnership or are wanting to create one, you should go about the creation of a partnership agreement. Not doing this means that all partners will be subject to the provisions of the Partnership Act 1980 as an implied contract, which includes things like a requirement for all partners to share profits equally, the right for each partner to have a salary, mutual agreement between all partners in order to bring potential new partners in, and shared responsibilities in the management of the partnership.
Should you wish to have different terms within your partnership than those set out above, you must include these within your partnership agreement.
Shareholder Agreement
It is too common for shareholders in a company to have no agreement in place between them. Regardless of the nature of the relationship between two or more shareholders, it is impossible to predict what may happen in the future, and it is always better to be safe than sorry if the worst happens.
There are many reasons why a shareholder may want to leave or be forced to leave a business, and these should always be accounted for when creating a shareholder agreement. After all, people, relationships, and businesses change, and it is highly unlikely that not even one of these changes will affect one or multiple shareholders at some point.
Shareholder agreements can set out key information for shareholders to know, such as how they can sell their shares, who (if applicable) they must offer these shares to in the first instance, and how the shares may be valued. It can even set out the circumstances in which a shareholder may be compelled to sell their shares due to extenuating circumstances.
Let BEB Help
Unsure whether you require any of these contracts? Want to chat about getting them drafted? Get in touch with us today at 01604 217365 or info@bebconsultancy.co.uk.