Executing and enforcing contracts are a normal part of many businesses’ day-to-day operations, and contracts come in many different forms. For instance, as a business owner, business contracts often cover many facets of daily operations ranging from equipment leases to employment and sales agreements.
The most common types of business contracts include:
- General Business Contracts: Common general business contracts include indemnity agreements, partnership agreements, property and equipment leases, and non-disclosure agreements. All of these contracts cover how a business is generally structured and how the business protects its stakeholders;
- Employment-Related Contracts: Employment contracts are utilized by businesses in order to outline the relationship between an employee and the business. Employment-related contracts outline the duration, benefits, compensation, grounds for termination, as well as specific issues including non-compete agreements and who owns work product that is produced while on the clock; and
- Sales-Related Contracts: Sales contracts (also known as sales agreements) cover how goods and services are purchased and sold, and let both parties know what to expect during the sale of those goods and services. Sales agreements serve to minimize the chances of disputes over the sales of goods and services later on by laying out the legal framework for transferring titles.
It is important to note that failing to properly execute any of the aforementioned business contracts may result in exposure to a variety of legal or financial liabilities. Thus, a properly drafted and negotiated contract is paramount to operating a successful business, as well as minimizing your exposure to lawsuits.
A business contract lawyer can provide invaluable assistance in guiding your business through complex legal agreements by helping you review, negotiate, or even draft legal agreements. This is especially true given the amount of formal and technical language that is often utilized in business contracts.
Although the specifics of business contracts differ, most share similar common elements. Most business contracts will include representations, real covenants, and conditions.
Representations often include a listing of the parties involved in the transaction, the date of the transaction, and the item or service involved in the transaction. The purpose of a contract’s representation is to state clearly the will of the parties, and to clarify the transaction to be made.
Covenants are promises or agreements made by a party to the contract. Examples of covenants include: allowing the other party to investigate their credit or assets, paying taxes on the property, indemnification against third-party lawsuits, covenants not to compete, covenants not to sabotage the business, or even a promise to apply for any necessary permits. Most commonly, the majority of covenants tend to fall on the seller because the seller usually seeks money from the buyer.
A condition is something within a contract that must be true or must occur in order for a deal to close. Common conditions that must occur in contract’s include: proof that the buyer can pay (usually involving a credit check); or a guarantee that every representation made by the seller will still be true at the closing date.
Conflicts in contracts typically arise from the conditions in the contract; however, the issue is whether a small mistake is enough to allow the party to walk away from the deal or seek damages.
Although there are general business contract lawyers that are knowledgeable in a variety of different areas of business law, many business contract lawyers choose to specialize in a certain field of business law.
Some common types of business contract lawyers and fields of specialization include:
- Sales Agreement/Contract Review Lawyers: Sales agreement lawyers are often recruited to analyze a sales agreement and confirm that you are getting what you expect to receive from a contract; or
- Further, they are able to guide you through the technical language of a contract and help you understand all of the different clauses contained in the contract to ensure you are aware of all the conditions.
- Licensing/Intellectual Property Contract Lawyers: Sometimes business contracts involve the purchase of intellectual property. Intellectual property is a work or invention that is the result of human intellect, and can include industrial property rights and copyright.
- Often contracts involving the purchase of intellectual property involve licensing the property. A license allows the creator (referred to as the “licensor” in the contract) of the intellectual property to charge for the the use of their invention by charging the person they license it to (referred to as the “licensee” in the contract) for the use of the invention or work.
There are many more specializations that fall under the umbrella of business contract lawyers including: tax contract lawyers, affiliate agreement lawyers, employment contract lawyers, independent contract lawyers, or subscription agreement lawyers.
As can be seen, there are a variety of different legal issues involved in the execution and enforcement of a business contract. Further, the language involved in business contracts is often very technical and contains a large amount of dense boilerplate language and that can affect each parties responsibilities in the contract.
Thus, it is in your best interest to consult with a well qualified and knowledgeable business contract attorney to review any contract issue that you are facing. A licensed and experienced business contract attorney can draft, review, and help you to understand the technical aspects of executing business contracts.