11 Things to Include in a Business Contract

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,656 reviews

Jump to Section

Need help with a Business Contract?

Post Project Now

A business contract is a legally binding written agreement between two or more business parties. It governs business transactions, terms and conditions, warranties, and other legal matters.

When writing a business contract, you will need to cover a number of bases to ensure that your document is legally enforceable and fully protects your business’s best interests.

A well-written business contract can ensure that your company is always protected, making it more difficult for another party to win a lawsuit against you.

This guide will explore 11 things to include in a business contract to protect your company and maximize your next collaboration.

1. Information of Parties Involved

Every good contract begins with a formal introduction. The introductory clause sets the scene for the entire document that follows.

In any business contract, you should introduce the businesses by name and state what they do. Then, you can follow up with the legal names of any parties and their titles in their organization.

Larger companies often have professionals sign on behalf of the entire organization. For example, C-level executives will typically sign contracts on behalf of their corporations or enterprises.

When entering any business contract, ensure that every party has the legal authority to sign on behalf of their company.

Here is an article about business contracts and what you need to write them effectively.

2. Legal Purpose of the Contract

There are many types of business contracts in effect. Therefore, your document should clearly state what you and the other parties are signing this document for.

In other words, the legal purpose also lays the ground for the formal agreement to all terms and conditions.

A legal purpose must be shared between all parties to be enforceable by law.

Common types of business contracts include:

  • Employment agreements
  • Partnership agreements
  • Profit sharing agreements
  • Nondisclosure agreements
  • Enterprise service agreements
  • Franchise agreements
  • Amendments to original contracts

Here is an article that explores 31 types of common business contracts.

3. Consideration

In contract law, consideration is a benefit each party receives as a deal. Therefore, consideration plays a large role in enforceability. It places something at stake for each party, giving them a reason for signing the contract in the first place.

In business, a contract often creates a promise between two or more parties. This means they agree to do or not do a certain action in exchange for something of value.

Consideration can be tangible assets, like money or real estate, or a promise to perform or not perform certain actions.

Here is an article that explores legal considerations.

Meet some lawyers on our platform

Richard N.

76 projects on CC
View Profile

Sunnita B.

15 projects on CC
View Profile

Namrita N.

13 projects on CC
View Profile

Benjamin W.

40 projects on CC
View Profile

4. Transaction Details

Business is rooted in the principle of exchange. The company does something in exchange for something in return. In contractual terms, this could be providing a salary and benefits to someone in exchange for their services, as in an employment agreement.

You should clearly detail the terms and conditions of your business transaction in any contract.

Be sure to include details such as:

  • The nature and scope of the transaction
  • The duration of the transaction
  • Both parties’ responsibilities
  • Limitations of both parties
  • Expected outcome of the transaction
  • Consequences of not fulfilling the terms of the agreement

Here is an article with an example of a typical business transaction agreement.

5. Competency

Competency shows a business’s ability to perform certain actions. For example, in business law, competency means that a company has the rights and abilities to act to enter an agreement and follow through with its requirements.

In a broader sense, legal competency reflects a signer’s ability to enter and maintain a contract. For example, people with intellectual or cognitive impairments, minors, and those with mental handicaps typically require a parent or appointed guardian to sign on their behalf.

Here is an article that provides more information on what competency means in law.

6. Acceptance

The executed contract must have the acknowledged acceptance of all involved parties. Acceptance usually arrives through a process of negotiation.

Negotiating business contracts is the best way for all parties to receive a fair deal and reach a mutual decision.

In legal terms, acceptance also means that a buyer agrees to the terms and conditions of a seller’s offer. In business contracts, one or both parties agree to the obligations placed upon them in the contract.

Here is an article about legal acceptance and different types.

7. Termination Clause

A termination agreement gives either party the right to end an agreement if the other party breaches the contract.

A contract termination agreement, also known as a termination clause, can allow parties to end a contract without legal penalties. This can make it easier to avoid financial loss or lawsuits if certain events make it impossible for a party to fulfill their part of the contract.

Termination clauses offer guidance on how the parties agree to respond and conduct business after a breach of contract. It can also give a business the right to end a contract for particular reasons without legal dispute.

Here is an article that covers termination clauses in greater detail and includes several real-life examples.

8. Dispute Resolution Agreement

In any contract, it is helpful to have a dispute resolution agreement. This clause guides parties on what methods they can use to resolve any disagreements arising over their agreement.

Dispute resolution can include:

  • Negotiation
  • Mediation
  • Arbitration
  • Evaluation
  • Rule making

These practices are drawn from Alternative Dispute Resolution (ADR) methods. These practices help both parties avoid lawsuits and legal penalties.

The exact type of dispute resolution a business contract includes will depend on the contract's nature and its signers' agreement.

Here is an article with more information on alternate dispute resolution (ADR).

9. Indemnification Clause

An indemnification clause prevents either party from holding the other legally responsible for damages and losses that happen in the future.

An indemnification clause, also known as a hold harmless agreement, is a safeguard for all parties in the agreement.

An indemnification clause can waive a business’s responsibility for certain events, such as financial losses and personal injuries outside its control.

Indemnity clauses are common between customers and businesses. They allow the business to provide products and services without being held liable for customers’ unmet expectations, financial losses, or damages from third-party events.

Here is an article with more information about indemnification and how it works in law.

10. Warranties

Warranties are promises about certain characteristics of a product or service. For example, a business may offer a money-back warranty for a product if it does not meet its quality standards.

In contract law, warranties can be expressed or implied.

Express warranties are written in the contract. Implied warranties are assumed assurances based on a sale of a good or service.

Warranties can also relate to intangible events, like third-party damages or financial losses on a business partner’s behalf.

A good business contract must clearly express what warranties each party offers and what their warranties will not cover.

11. Signatures of Parties Involved

All contracts must be signed and dated by the appropriate parties. Make sure that signatures are legible and printed on a designated signature line at the end of the document.

Signers should only use their legal first and last names. They must also include any relevant titles, such as their professional role in a company.

Datelines beneath each signature make a contract valid. They can also confirm or establish an effective date.

Here is an article where you can learn more about effective dates in contracts.

Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

View Rebecca
Member Since:
April 6, 2021

Rebecca L.

Free Consultation
Get Free Proposal
San Diego, CA
11 Yrs Experience
Licensed in CA, DC, VA
New England School of Law

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

View Samantha
Member Since:
April 15, 2021

Samantha B.

Principal and Founder
Free Consultation
Get Free Proposal
8 Yrs Experience
Licensed in FL, IL
Ave Maria School of Law

Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

View Pritesh
Member Since:
April 19, 2021

Pritesh P.

Chief Legal Officer
Free Consultation
Get Free Proposal
Chicago, Illinois
14 Yrs Experience
Licensed in IL
Western Michigan University Cooley Law School

Experienced General Counsel/Chief Legal Officer

View Richard
Member Since:
April 21, 2021

Richard G.

Free Consultation
Get Free Proposal
1 Yr Experience
Licensed in MA
Massachusetts School of Law

Attorney Gaudet has worked in the healthcare and property management business sectors for many years. As an attorney, contract drafting, review, and negotiation has always been an area of great focus and interest. Attorney Gaudet currently works in Massachusetts real estate law, business and corporate law, and bankruptcy law.

View Ayelet
Member Since:
June 9, 2021

Ayelet F.

Free Consultation
Get Free Proposal
Coral Springs, FL
9 Yrs Experience
Licensed in FL
Nova Southeastern University

Ayelet G. Faerman knows what influencers mean to brands today. With experience as legal counsel for a beauty brand for over 5 years, and overseeing multiple collaborations, Ayelet has experienced the rise of influencer marketing. As the founder and managing partner of Faerman Law, PA her practice focuses on influencer relations including a specialization in contract negotiations.

View Robert
Member Since:
May 12, 2021

Robert D.

Free Consultation
Get Free Proposal
24 Yrs Experience
Licensed in OH
University of Akron School of Law

I am a general practice lawyer with 21 years of experience handling a wide variety of cases, both civil and criminal

View Melissa
Member Since:
May 27, 2021

Melissa G.

Trademark and Business attorney
Free Consultation
Get Free Proposal
Fort Lauderdale
10 Yrs Experience
Licensed in FL
University of Miami School of Law

Melissa D. Goolsarran Ramnauth, Esq. is an experienced trial-winning trademark and business attorney. She has represented large businesses in commercial litigation cases. She now represents consumers and small businesses regarding federal trademarks, contracts, and more. Her extensive litigation knowledge allows her to prepare strong trademark applications and contracts to minimize the risk of future lawsuits.

View George
Member Since:
June 21, 2021

George B.

Free Consultation
Get Free Proposal
Detroit, MI
9 Yrs Experience
Licensed in MI
Western Michigan University - Cooley Law School

I help start-ups, small businesses, and people realize their potential by leveraging my legal and technological experience. Legally skilled in employment law, intellectual property, corporate law, and real estate transactions.

View Ryan
Member Since:
June 8, 2021

Ryan W.

Free Consultation
Get Free Proposal
Mechanicsburg, PA
12 Yrs Experience
Licensed in PA
Widener University Commonwealth School of Law

Ryan A. Webber focuses his practice primarily on Estate Planning, Elder Law, and Life Care Planning. His clients range from young families concerned about protecting their family as well as aging individuals. Ryan provides Estate Planning, Trust Planning, Special Needs Planning, Public Benefit Planning, and Estate Administration. Ryan focuses on the holistic approach to the practice of elder law which seeks to ensure clients are receiving good care when needed and that they preserve enough assets with which to pay for such care. Many families and individuals also come to Ryan for preparation of their wills, power of attorney, and healthcare guidance documents. Additionally, Ryan assists small and medium sized business owners with their organizational and planning needs. From starting or winding down a business, Ryan provides quality business advice.

View Jonathan
Member Since:
June 21, 2021

Jonathan G.

Free Consultation
Get Free Proposal
Lakewood, CO
9 Yrs Experience
Licensed in CO, TX
Texas Tech University School of Law

Small Business Attorney licensed in Texas and Colorado. Based in Dallas, appointments available in DFW area.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call