4 Essential Contracts That All Businesses Need To Know About!


For everyone in the business world – whether you are a local business, start-up, or a medium enterprise, you will compulsorily require legal contracts in place. This is essential to protect your business! When you hire an employee, you need an employment letter or an employment contract. When you provide services you need a service contract, when you sell your shares, you require a Sale Agreement, and so on.

All these contracts play an essential role in making everything legally acceptable and binding for parties involved. In a way, contracts and legal documents are the only things against which you have a legal remedy and solve any dispute that arises in the future.

1) Employment Offer Letters

One of the best ways to protect your business from legal liability and misunderstanding is to have an employment offer letter issued and sent to the prospective employee. The employee is required to sign it, evidencing the scope of the employment relationship between the parties.

An employment letter covers the following points:

  • The job offer
  • The responsibilities of the job
  • The salary and the benefits
  • The grant of leave
  • Etiquette and culture of your company
  • Grounds for termination
  • Or, the employment is ‘At will,’ meaning the employee can quit or the employer can terminate him or her at any time.

2) Confidentiality Agreements

All employees have access to a company’s confidential information. To make sure the employees keep the proprietary information of the company confidential, it is often mandatory to make employees sign a Confidentiality and Invention Assignment Agreement. This agreement deals with the confidentiality aspect: the ideas, business strategies, and work products developed by the employee belong to the company, the trade secrets of the company, etc.

There is no scope of renegotiation open for confidentiality agreements especially if you are a Pharmaceutical company, or an Information Technology company. It is a must-have to protect vital data of your company.

If you expect to have venture capitalists or any other professional investors invest in your company, they will also expect you to have agreements in place for all the employees.

3) Service Contracts

If your company provides professional services as opposed to selling a product, it needs to have its standard form of Services Contract. It can be redrafted with several titles, depending on the nature of the contract.

Having a good contract here is essential to ensure a smooth business. Draft contracts in a water-tight manner to avoid misunderstandings and undue liability. Ideally, this agreement gives you flexibility in completing the services, lists the fees for the job, the scope for additional fees in case of unforeseen circumstances. It also limits your liabilities to the extent of the amount paid for the services.

Many businesses sell products and therefore need a robust Sales Contract. The Sales Contract lays out the price, equipment, and conditions for the sale of goods, terms, or other products. Of course, some businesses, like grocery stores or vegetable vendors, do not need Sales Contracts, but if you are operating a large-scale business, you require a Sales Contract.

4) Terms of Use Agreement for Websites

Most growing businesses have established or need to establish a website to market their company and their products. Essential to these websites are Terms of Use Agreements, which is essentially a contract between the website owner and the users of the site and any purchasers of goods or services from the site.

A well-drafted agreement would include:

  • Limitations on how the website can be used,
  • Copyright protection warnings, disclaimers, liability limitations,
  • Disclosure on the websites privacy policy for customer information, the jurisdiction where any disputes must be brought
  • Data protection policies


Drawing up contracts is extremely important for almost all businesses. Ensure that all your contracts are carefully drafted to avoid future risks. Let us know if this article helped in clearing all your doubts. It is time to get the business up and running!


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