Feb 22

What every business contract should contain

By Randal Jackson | Business Contract

Legal aspects of running a business are simply too complicated and time-consuming for business owners, and they usually hire lawyers and legal experts who are in charge of this section and they take care of all legal requirements, take the appropriate legal action and represent the enterprise in a dispute, if it ever happens.

However, if you own a small business or your company just can’t afford fancy and expensive lawyers for every contract you make, here is a short guide on how to know if your contract has all necessary elements and whether it can have any value in court. Your business may be in danger if you fail to honor a certain important contract, or if you miss to sign some agreement, and this means that you should be very careful when it comes to that little piece of paper, since it can save your business and make it much larger in some cases but it can also ruin it, if things are not done in the appropriate manner.


            Contracts are basically written agreements between two (or more) parties, and they can me concluded between seller and a buyer, between an employer and an employee, or between a contractor and a client. These types may vary, and they depend om the specific situation, and that means that many types of businesses and services can have special requirements and parts which should be in every contract. However, there are several things which are irreplaceable and they can be found in almost every contract, at least in those which hold any power in legal proceedings. Those basic elements are: parties, agreement, terms and signature/date. If any of those parts is missing, the contract can be proclaimed invalid and this can have severe consequences on your business. Therefore, be very careful when signing and creating contracts and always consult an expert, if possible.

Businessman signing contract.

Other important elements of almost every contract include:

– Definitions: which is usually the first part of the document and this area is designed to explain who will be the parties and what will be the topic of the agreement

– Notice: this area tells where correspondence go and how communication should be done

– Governing law: this short section should declare which law is used in creation of the contact and which legislation can be addressed in case of a dispute (state, county or country)

– Force majeure: this section explains that parties are excluded from liability in case of any extraordinary events or circumstances (natural disasters and similar)

– Payment schedules: some contracts contain this part, and it is used to specify when and how should the payments take place

– Termination: this part is designed to arrange when and how should a contract end

– Separability: certain contracts have multiple points, and this area specifies that some of those points may be invalid due to changes in the law but that the rest of the contract stays in function.


Additionally, some contracts may contain some form of confidentiality agreement, but these are usually separated and placed in special kind of contracts which usually deal with intellectual property and they are known as non disclosure agreements.