In general, a contract is a voluntary agreement that creates legal obligations between two or more parties. To form a contract, there must be an offer, an acceptance of the offer, and some form of consideration (i.e. payment) for the performance of the contract terms.
Every type contract has its own nuances. Below is a general summary of several common contract types.
A sales contract is an agreement between the parties regarding the details of the transfer of ownership of an asset. A sales contract may be for the sale of goods, services, or real property. Some sales contracts must be in writing and comply with other minimum standards, depending on state law.
Additionally, sales agreements may come in a different form. These include:
When the parties are involved in the sale of a business, the sale will be accompanied by an acquisition agreement. Usually, the acquisition agreement is in the form of an entity purchase agreement or an asset purchase agreement
A lease is an agreement between two parties for the use of property.
Lease agreements entered into for the use of real property create a landlord-tenant relationship between the lessor (landlord) and the lessee (tenant). The terms included in a residential lease agreement may differ from those included in a commercial lease agreement. Generally, a commercial lease contains many more terms and is subject to more negotiation than a residential lease. Alternatively, state laws impose minimum standards of habitability on landlords for residential leases.
Parties can also enter into an agreement for the lease of equipment. This allows businesses to lease equipment that would otherwise be too expensive to purchase outright.
A licensing agreement, or licensing contract, is an agreement where an owner of intellectual property such as a copyright or patent, grants another party to use the intellectual property.
The agreement generally contains terms that address the following:
- Payment and royalties
- Scope of use including geography and exclusivity
- Term of use
Employment agreements, or employment contracts are those that specify the terms of employment. This type of agreement can be oral or written, although it is easier to enforce if the agreement is written.
An employment agreement may contain the following terms:
A non-disclosure agreement, also called a confidentiality agreement, is often entered by an employer and employee. The NDA prohibits the parties from disclosing certain information. Often, the protected information includes intellectual property such as trade secrets.
In general, there are three types of federal government contracts used to acquire services or property from private parties, non-profits, or state and local governments:
- Procurement contracts
- Federal Grants
- Cooperative Agreements
Additionally, qualifying small businesses as well as women and minority owned businesses have special opportunities to bid on government contracts. Find out more at the U.S. Small Business Administration.
An option contract is an agreement between parties that one party has the right to purchase certain rights at a future date for a set amount of money. Option contracts may accompany a lease agreement (option to purchase property), may function to keep an offer open for an extended period of time, or may accompany a contract giving the party the option to renew it.
If you are in the process of drafting and negotiating an agreement or are concerned about the breach of an existing contract, you may want to consult an attorney. An attorney experienced in contracts law can help you protect your interests.