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Contracts That Can Be Used by New Businesses

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So, you’ve decided to dive into entrepreneurship. Congratulations on your new venture! But we’re sure you have some questions. For example, what legal implications come with starting a business? 

This article will summarize specific contracts crucial for your start-up’s success. Of course, all arrangements should be agreed upon by both parties and free from ambiguities. 

You can write your own legal contract, or if you doubt your writing skills, you can also hire a legal writer as an alternative.

Some of the most common contracts you will need to enter include the following:

Employment Offer Letters

Suppose you’re looking to hire employees to help you grow your business. You should prepare an employment offer letter, protecting you from legal liabilities and misunderstandings. Remember to have your new hires sign it, indicating the establishment and scope of the employment relationship.

A good employment offer letter often indicates the responsibilities of the job, the wages, and the benefits. It should also stipulate that employment is voluntary, which means the employee can resign or the employer can terminate the contract at any time. 

Loan Agreements

You’re most likely to apply for loans to get extra funding for your start-up expenses as a new business. Certain loan agreements with banks or lending institutions simply ask you to sign the lender’s standard form, usually containing lopsided provisions or conditions that favor the lender and impose several restrictions on the borrower.

As a borrower under a loan agreement, you must negotiate better terms and fully understand the necessary provisions such as the total cost of the loan, the payment schedule, and the right to prepay the loan without penalties. 

Sales Contracts

If your start-up business sells products to consumers, you need a good sales contract. This contract tackles the price, terms, and conditions for the sale of goods and services. Some transactions won’t require sales contracts, but it’s best to draw one up if the transaction involves a considerable amount of goods or money.

Sales contracts can be an invoice or a purchase order form; you can even personalize it for a specific sale. However, most sales contracts should indicate the price, along with any price adjustments stemming from particular scenarios, payment structures or terms, disclaimers, and expected warranties.

Service Contracts

If your company offers professional services instead of selling a product, it needs a standard services contract. This type of agreement indicates the terms and conditions of the services that you’ll provide and discusses your responsibilities and liabilities.

Having a well-written service contract is crucial since this will help you avoid miscommunication and undue liability. Preferably, this agreement will afford you flexibility in completing the services, indicates the fees for the service, and ensures limitations on any potential liability on your end.

Letters of Intent

A letter of intent can prove to be a quick way to generate momentum for a deal. The purpose of a letter of intent is for both parties to get a “handshake” deal on the key points and then proceed to work on the finer points.

It’s essential to emphasize binding or nonbinding considerations in the letter. Most letters of intent are nonbinding and simply express that both parties have a deal in mind and wish to negotiate further to achieve a definitive and final agreement. Some letters of intent also serve as binding contracts, so be mindful of the provisions indicated.


A business lease for an office or retail space is usually one of the primary contracts for a business. Most landlords offer standard leases, which are frequently lopsided in favor of themselves.

Since leases are a significant commitment for your business, you have to ensure that the lease term is sufficient, with a right to extend, and includes details on the landlord’s obligations. 

Website Terms of Use Agreement

If your start-up business plans to establish a website to market your company and your products and services, you would need a terms of use agreement — a contract between the website owner, the users of the site, and any buyers of goods or services from the site.

You need a well-written terms of use agreement to protect yourself, the site owner, from possible legal liabilities. A well-written agreement includes limitations on site use, copyright infringement warnings, disclaimers, liability limitations, and full disclosure of your site’s privacy policy in handling customer information.

Final Thoughts

Understanding the legalese that comes hand-in-hand with entrepreneurship and its associated contracts can prove to be intimidating. Luckily, you have access to excellent resources here at Guru, as you can hire a legal professional and their expert advice can help you make the best decision for your business.  

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