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About business agreements

A business agreement records how a commercial relationship will operate: what each side supplies, how money moves, who decides what, and how the arrangement can be unwound.

Business agreements tend to fail at the edges — deadlock between owners, automatic renewals nobody diarised, and liability caps that turn out to sit above the value of the contract.

Commercial contracts between businesses are largely governed by what the parties wrote down. Courts are far less willing to imply fair terms than they are in consumer contracts, which makes precision here worth the effort.

For suppliers, manufacturers, distributors and resellers

For agents, brokers, affiliates and their principals

For businesses outsourcing functions and their service providers

For LLC members, company directors and corporate secretaries

For startups, founders and early-stage investors

For business partners, founders and shareholders

For businesses engaging service providers and the providers themselves

For business buyers, sellers and their advisers

For software providers and business customers

For parties negotiating a transaction

For IT providers, agencies and the businesses they support

For parties settling a dispute or holding funds in escrow

For software developers, agencies and product owners

For consultants, advisers and their client organisations

For franchisors and prospective franchisees

For companies, advisers and consultants

For businesses, employees and anyone sharing sensitive information

For data controllers and their service providers

For PR consultants, promoters, sponsors and brands

For sponsors, advertisers, publishers and event organisers

For marketing agencies, consultants and their clients

For content creators, influencers and brand marketers

Common mistakes in business agreements

  1. No exit or deadlock mechanism. Two equal owners who disagree can paralyse a company. Buy-sell provisions, valuation methods and tie-break procedures are far cheaper to agree at the start than to litigate later.
  2. Auto-renewal with no diary date. Evergreen clauses roll a contract on for another full term if notice is missed. Record the notice deadline the day the contract is signed.
  3. Liability caps that do not fit. A cap set at the value of one month's fees is meaningless if a failure could cause six figures of loss. Match the cap to realistic exposure and carve out the things that should never be capped.
  4. Vague termination triggers. Distinguish termination for convenience, termination for material breach with a cure period, and immediate termination on insolvency. Each needs different notice.
  5. Missing confidentiality survival. Confidentiality obligations should expressly outlive the agreement. If they end with the contract, so does the protection.
  6. Ignoring assignment and change of control. Without a clause, your counterparty could be acquired by a competitor and the contract goes with it. Require consent for assignment.

Business questions

Does a business contract need to be signed by a director?

It needs to be signed by someone with authority to bind the entity. For a company that is typically a director or an officer with delegated authority; for an LLC, a manager or authorised member. If you are unsure, ask for evidence of authority before relying on the signature.

Are electronic signatures valid for commercial agreements?

Yes. Under the US ESIGN Act and equivalent legislation elsewhere, electronic signatures carry the same legal weight as ink for the vast majority of business contracts. Keep the audit trail showing who signed and when.

What happens if one party breaches?

It depends on how serious the breach is. A material breach normally entitles the other party to terminate and claim damages; a minor breach usually gives a right to damages but not termination. A clear cure period in the contract avoids arguing about which it was.

Should every business agreement be reviewed by a lawyer?

Not every one. Routine, low-value or short-term agreements are commonly handled in-house from a solid template. Anything involving significant money, equity, exclusivity, long-term commitment or unusual liability is worth a review.

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