Mark Briggs: Corporate Contracts to Always Keep On-Hand
No matter what type of business you may own, there will be many occasions when you should to put an agreement in writing. Even good people trying their best can have misunderstandings over key terms of an oral agreement, so it is a good idea to get any important agreements in writing. Below are a few of the most commonly used business contracts.
Nondisclosure / Confidentiality Agreement
This type of contract is often used to protect sensitive or confidential information during a business transaction. For example, if your business handles clients’ confidential information on a daily basis, then you’ll want to have all of your employees who have access to this information sign a non-disclosure agreement before hiring them.
This way, in the event that any confidential information is leaked, you have the legal grounds to prevent further disclosures and be paid for any damages those disclosures caused. Nondisclosure agreements can also be used with clients and vendors who have access to confidential information, such as financial statements and business plans.
A promissory note is a legally binding and corporate version of an “IOU” and is used frequently in the business. Any time a business lends or borrows money, a promissory note should be used. Promissory notes should at least include the amount owed, interest rate, payment amounts and dates, penalties for late payments, what constitutes a default under the note, and what happens if a default occurs.
Bill of Sale
A bill of sale is written proof of the purchase of one or more assets. It will list the buyer, seller, date of sale and assets purchased. Bills of sale are useful in transactions where one company buys all or a large part of another company’s assets. Those agreements are pretty long and have a lot of details in them that third parties don’t need to see. So, a bill of sale is sometimes used as a supplement to the main contract as a document to show third parties to transfer title to the purchased assets.
These are just a few of the most important business contracts you’ll likely encounter as a business owner. By being familiar with them, you’ll be in a better position to scrutinize contracts before you sign them.
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