Types of Legal Contracts

Business contracts are one of the most essential documents for corporate legal actions. Business contracts can also be an incredibly varied legal instrument. Some business contracts may be purely verbal contracts. Verbal contracts often are the easiest and fastest contracts to construct, but they also usually offer the least legal protections.

Written business contracts are the most traditional type of legal contracts as they offer a clear, explicit terms and provisions. Drafting a written contract also can be an important activity to allow the involved parties to open up a discussion for balancing their desired goals and shared interests. Other business contracts, known as conditional contracts, may only come into effect in the event that certain hypothetical events are satisfied.

Business contracts may also vary greatly in the involved parties of the contract. Some contracts may establish legal agreements between large corporations, while other documents might establish guidelines between shareholders, business partners, business owners and their employees, or businesses and their clients.

Contracts versus Agreements

One common misconception that inexperienced clients may make is to confuse the meaning of a contract with that of an agreement. A contract outlines any legally binding agreement made between two or more parties. Meanwhile, an agreement simply refers to shared understanding between two or more parties. The key difference here is that there is no legal obligation or requirement to fulfill the terms of an agreement. It is crucial for this reason to uphold all business agreements contractually in order to ensure their legitimacy.