A contract is a legally binding written or oral agreement involving employment, sales, or tenancy. Small business contracts can protect the business, and prevent legal issues from arising due to employee, sales, or even partnership disputes.
Some contracts must be written to be enforceable, including the sale of real estate. Therefore, to protect the interests of yourself and your business, it is always best to have it in writing.
What Do Small Business Contracts Cover?
Small business contracts can be simple or detailed, and cover a wide range of topics crucial to the business’ success, including:
- Employment and offer letters
- Leasing of retail or office space
- Business insurance
- Sales or service contracts
- Debt collection for small business
Contracts can serve the essential needs of a small business and its operation. Contracts between owners and its employees, customers, landlords, and a host of other entities are key in the success of businesses, small and large.
What if a Small Business Contract Has Been Breached?
If a contract has been breached, remedies are available. Usually, a court will order damages, paid by the breaching party in the form of monetary compensation. Or, the court could order a remedy in equity. Also called an injunctive relief, a remedy in equity orders a party to do something.
Examples of remedies in equity include the cancellation of a contract by the court, which will no longer bind the parties to each other. Or, the court could order specific performance, which requires the breaching party to fulfill the service or deliver the goods as promised in the contract.
But, most business contracts have a liquidated damages clause which is triggered in the event of a breach. While there are specific requirements for a liquidated damages clause, most businesses can use them in their contracts. So long as the liquidated damages clause are not:
- Attempting to punish the breaching party;
- Creating damages of an “unconscionable amount”; and
- Triggered due to a delay in payment.
Creating a liquidated damages clause can save a business time and money in the event of a breach. But creating one can take a while, and should be drawn up by a lawyer.
People also ask:
Do I Need a Lawyer for Help With Small Business Contract Issues?
Contracts are an essential part of any business. Starting your own business takes a lot of hard work, and contracts can help protect what you have built. A business lawyer in your area can advise you on what small business contracts you need in securing your business and livelihood.