ContractsCounsel Logo
Home Blog 11 Things to Include in a Business Contract

Jump to Section

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

Daehoon P.

199 projects on CC
CC verified
View Profile

Forest H.

221 projects on CC
CC verified
View Profile

Ryenne S.

632 projects on CC
CC verified
View Profile

Linda W.

10 projects on CC
CC verified
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.

See Business Contract Pricing by State

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.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Need help with a Business Contract?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,053 reviews

Meet some of our Lawyers

Karen S. on ContractsCounsel
View Karen
4.8 (24)
Member Since:
January 31, 2023

Karen S.

Free Consultation
Atlanta, GA
13 Yrs Experience
Licensed in GA
Georgia State University

I'm an attorney available to help small businesses in Georgia get started with initial business set-up, required filings, tax strategies, etc. I'm also available to draft, review, and negotiate contracts. I can draft and file real estate quit claims as well. My experience areas include small business startups, information technology, technology innovation, real estate transactions, taxes, community associations, intellectual property, electrical engineering, the business of video game development, higher education, business requirements definition, technology consulting, program management, and the electric utility industry. I work part-time for a local law firm and part-time in my solo practice. I'm also an adjunct professor at Southern New Hampshire University teaching business innovation and business law. In addition, I'm part owner, legal counsel to, and a board member of a virtual reality video game development company. I am a member of the Georgia Bar Association. Please reach out if you need attorney, documentation or consulting help in any of those areas!

Michael M. on ContractsCounsel
View Michael
4.9 (299)
Member Since:
September 10, 2022

Michael M.

Free Consultation
Los Angeles, CA
37 Yrs Experience
Licensed in CA

www.linkedin/in/michaelbmiller I am an experienced contracts professional having practiced nearly 3 decades in the areas of corporate, mergers and acquisitions, technology, start-up, intellectual property, real estate, employment law as well as informal dispute resolution. I enjoy providing a cost effective, high quality, timely solution with patience and empathy regarding client needs. I graduated from NYU Law School and attended Rutgers College and the London School of Economics as an undergraduate. I have worked at top Wall Street firms, top regional firms and have long term experience in my own practice. I would welcome the opportunity to be of service to you as a trusted fiduciary. In 2022 I was the top ranked attorney on the Contract Counsel site based upon number of clients, quality of work and top reviews.

Michael C. on ContractsCounsel
View Michael
5.0 (1)
Member Since:
March 17, 2022

Michael C.

Managing Member
Free Consultation
13 Yrs Experience
Licensed in NY, TX
Wake Forest University School of Law

A seasoned senior executive with experience leading the legal and compliance functions of healthcare entities through high-growth periods. I have experience managing voluminous litigation caseloads, while also handling all pre-litigation investigations for employment, healthcare regulatory, and compliance matters. Similarly, I have led multiple M&A teams through purchase and sale processes, including diligence and contract negotiations. Finally, I have extensive contract review experience in all matters, including debt and equity financing, healthcare payor contracting, vendor and employment agreements, as well as service and procurement agreements.

Michael K. on ContractsCounsel
View Michael
5.0 (47)
Member Since:
June 28, 2021

Michael K.

Associate Counsel
Free Consultation
Miami, FL
6 Yrs Experience
Licensed in FL
St. Thomas University School of Law

A business-oriented, proactive, and problem-solving corporate lawyer with in-house counsel experience, ensuring the legality of commercial transactions and contracts. Michael is adept in reviewing, drafting, negotiating, and generally overseeing policies, procedures, handbooks, corporate documents, and more importantly, contracts. He has a proven track record of helping lead domestic and international companies by ensuring they are functioning in complete compliance with local and international rules and regulations.

Drew B. on ContractsCounsel
View Drew
Member Since:
July 1, 2021

Drew B.

Managing Member
Free Consultation
Cleveland, Ohio
26 Yrs Experience
Licensed in MO, OH
Saint Louis University

Drew is an entrepreneurial business attorney with over twenty years of corporate, compliance and litigation experience. Drew currently has his own firm where he focuses on providing outsourced general counsel and compliance services (including mergers & acquisitions, collections, capital raising, real estate, business litigation, commercial contracts and employment matters). Drew has deep experience counseling clients in healthcare, medical device, pharmaceuticals, information technology, manufacturing, and services.

Daniel R. on ContractsCounsel
View Daniel
Member Since:
July 1, 2021

Daniel R.

Managing Attorney
Free Consultation
11 Yrs Experience
Licensed in IL
Gonzaga School of Law

Daniel is an experienced corporate attorney and works closely with corporations, privately held companies, high-net worth individuals, family offices, start-ups and entrepreneurs. Daniel graduated from the Gonzaga University School of Law and is licensed to practice law in Illinois.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with a Business Contract?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,053 reviews
See All Business Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

Need help with a Business Contract?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,053 reviews

Want to speak to someone?

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

Request a call

Find lawyers and attorneys by city