A contract is an agreement (usually in writing) that outlines the rights and obligations of parties. Should one party not meet their obligations, then the other party has legal recourse through the court system.
There are numerous types of contracts that can be useful for business owners, but here are two notable examples to keep in mind.
1. Employment contracts
The relationship between employee and employer should be mutually beneficial. Employees help to drive profits and they should be rewarded with fair compensation in return. However, it’s a little more complex than this. Employees also have certain legal rights at both a state and federal level. It’s a lot to remember.
An employment contract can help all parties to know exactly where they stand. The terms of the contract can include start dates, end dates, salary, holiday entitlements, working hours and much more. Having the key rights and obligations of each party written down can help to prevent and resolve disputes should they arise.
2. Non-disclosure agreements (NDAs)
Most companies handle some form of sensitive information. This could be employee details, client lists, trade secrets and much more. It’s important that such information does not fall into the wrong hands.
One way that you can address this is to use NDAs. These are legally binding contracts, or they can even be clauses within other contracts, that prevent sensitive information from being shared. The contract should clearly state the types of information that should not be shared as well as potential repercussions for leaking information.
These are just two notable examples of useful contracts in business- there are several others. To find out more about how contracts can protect your company, it may be beneficial to seek legal guidance.