What is a Business Agreement?

What is a Business Agreement?

Adrianna Ngo
 | 
Ever wonder why every subscription you purchase or app you download asks you to agree to their terms and conditions?

This is because a standard terms and conditions agreement lists a certain set of regulations that you must agree to follow in order to use a service. In other words, a terms and conditions agreement acts as a legal contract between you and the service provider.

This is a very common example of a business agreement.

A business agreement is a legally binding contract between two or more parties regarding the exchange of goods or services. This agreement can be oral or written, but the main objective of a business agreement is to ensure that all parties involved are in sync and outline the terms and conditions of the business relationship.

Components of a business contract

Since business agreements are contracts, they must fulfill the requirements of a legal contract in order to be valid.

The main elements of an enforceable business agreement are:
  • Mutual assent- the different parties involved must come to an agreement regarding the business contract
  • Offer and acceptance- an offer must be made by one party to exchange goods/services and accepted by another party
  • Consideration- a benefit or value that is bargained for between the different parties
  • Capacity- the ability and competence for a party to enter a business agreement
  • Legality- the contract in making is legal and doesn’t break any laws
The above components are required in order to create a legal business contract, but generally you should also include:
  • Names and roles of all parties involved
  • Specific times, dates, or locations 
  • Terms and conditions of the agreement
  • Certain legal consequences that may arise if a party breaks the agreement
Types of business agreements

There are many different types of business contracts based on what agreements parties are trying to come to. Here are some of the most frequent cases of business agreements:
  • Mutual Non-disclosure Agreement- protects sensitive and confidential information within a business and requires that signing parties can’t release information protected by the contract
  • Joint Venture Agreement- when two parties come together to work for the purpose of accomplishing a specific project
  • Settlement Agreement- an agreement between parties that results in the dismissal of a lawsuit
  • Partnership Agreement- discusses the relationship established between parties and individual obligations and responsibilities
Importance of a business contract

When engaging in a business agreement, it is important to make a legally binding contract so that all parties involved are accountable for their actions. A contract ensures that parties must follow the terms listed in the contract or else they may face consequences. 

Even if you are going into business with friends or family, get a contract. 

In a contract, there are certain expectations for each party that should be outlined. Having these set expectations make it a lot easier to solve any disputes or problems that could occur in the future because you can always refer back to your contract to see what responsibilities each party has.

Additionally, a contract protects both parties and makes sure that there is pressure on everyone to stick to the agreement. 

If you are interested in creating a legally binding contract for any business agreement and are looking for legal assistance, we can help you right here.

We have a variety of well-qualified business lawyers that work on contracts and agreements for an affordable price. All you need to do is click here and find a lawyer through our attorney matching process.


 
This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.
 
Adrianna Ngo

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