Business contracts come in many different forms and can range from large documents to verbal agreements sealed with a handshake. You most certainly come across a number of contracts in your personal and professional dealings each day, though you may not always recognize their implicit value. Here are 5 common contracts you will come across in a business setting.
Operating agreement
If you are starting an LLC (limited liability company), you will benefit from an operating agreement, especially if you have a multi-member LLC. An operating agreement’s main purpose is to outline the internal operations of your business, based on your specifications and needs as a business owner. Following the signing process by all members of the LLC, the operating agreement will serve as an official contract that binds the members to all outlined terms, rules, provisions, and regulations.
Employment contract
An employment contract or compensation agreement can take the form of either a written agreement or an implied contract between an employer and employee, the latter being a more frequent option. Most US states consider employment “at will,” which refers to an employer reserving the right to fire an employee at any time without cause. An employee may be offered an employment contract to show a commitment to employment for a certain time period. This contract may also outline vacation and sick days, health care benefits, employee behavior, and a non-compete clause upon termination.
Bill of sale
One of the most common business contracts used in everyday life is the bill of sale, which is an agreement outlining the transfer of ownership of goods between two parties. A bill of sale can take many forms, including a simple grocery store receipt or the form you fill out when transferring ownership of your motor vehicle. It generally includes information on what the property is, how much it cost, when it was sold, as well as who sold it.
Distribution agreement
A distribution agreement, classified as either exclusive or non-exclusive, is an agreement of terms and conditions between the supplier of goods and a distributor of said goods. In certain cases the supplier of the goods may also be the manufacturer, though he may also be a reseller of another’s goods. The agreement often outlines territory and scope, non-compete rules, performance obligations (usually minimum), and marketing and trade mark licensing.
Nondisclosure agreement
A nondisclosure agreement (NDA) is a document that can be implemented with potential and current employees, vendors, and clients, to safeguard confidential information. An NDA outlines what information is covered, and provides you with the ability to pursue legal action against any party that discloses the information despite the agreement.
To learn more about any of these business contracts, or to speak with our team about your Arizona business law needs, contact us today.
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