Business contracts are an important part of any small business. They serve as an agreement between two or more parties, whether it’s another business, a client or an employee.


Contracts ensure each party understands what is required of them, with the goal of preventing future legal issues. That being said, contract disputes are still a common occurrence amongst businesses, often due to a lack of clarity and information in the contract.


That’s why it’s imperative to understand the difference between business contracts, what is legally required in them and important information to include. By understanding these details, you will be in a better position to avoid future contract disputes and legal issues. 

What are the different types of business contracts?


There are various types of business contracts an organization can have, here are 5 common ones you may use in your small business:  


  1. Non-Disclosure Agreement: A legally binding contract between two parties outlining confidential information or material that’s not to be shared with a third party. 
  2. Commercial Lease: A legally binding agreement between the landlord (property owner) and the business tenant which outlines the obligations of both parties. 
  3. Employee Contract: A well-constructed outline of duties, expectations, compensation, benefits and more.
  4. Contractor Agreement: Defines the official business relationship between client and contractor. 
  5. Supplier Contract: A legal agreement between a business and external supplier to establish the delivery of a set of goods, products and services. 

How do you avoid contract disputes?


There are a number of actions you can take to avoid potential contract disputes, including:

Ensure your language is accurate

Since the words chosen in a contract can have a significant impact on their interpretation, it’s important to ensure that your contracts are carefully reviewed for accurate language

Have a clear scope 

It’s essential to have a clear outline in your contract for what’s expected of all parties. Being as detailed as possible ensures that there’s no confusion as to what each party’s responsibilities are.

Include specific terms and conditions

Terms and conditions can include specific details covering duties to be performed, payments or fees, liability, amendments, terminations and disclaimers, amongst others. A small business lawyer can help guide you on the necessary terms and conditions you should include for your business. 

Document negotiations

Before the official contract has been signed by all parties, it’s just as important to document any conversations and negotiations that happened beforehand. That way you can ensure you have a document to refer to should any conflicts arise in the future. As a result, you may be able to avoid a dispute if parties are reminded of what was the original intent. 

Ensure all parties are aware of the terms and responsibilities

Contracts shouldn’t be one-sided, and all parties to the contract should be involved in its creation. Although it may be tedious, it’s important to set aside time to review the contract thoroughly with each party. By doing so, everyone has an opportunity to add to the terms or ask questions, which can help you avoid future confusion, conflicts and disputes. 

Many businesses choose to have a small business lawyer create or review their contracts to ensure accuracy, clarity and that all the necessary information is included. If you have any questions or require assistance with your contracts, we are here to help. Please don’t hesitate to contact us today!