What you Should Know When Entering A Business Contract in Nigeria

As a business owner, contracts are inevitable, and they are one of the effective ways of protecting your business interests. A contract is a verbal or written agreement between two or more parties. There are different types of contracts that a business owner can use to protect their business interest. contracts can be oral or written but it is advisable to have a written contract to ensure proper enforcement of the terms of the contract.

Basic types of business contracts

1. Sales contracts

2. Employment contract

3. Partnership agreement

4. Lease agreement

5. Service agreement

6. Non-disclosure agreement

7. Franchise agreement

8. Joint venture agreement

9. Licensing agreement etc

Type of Contract When do you need this Contract
Sales Contract This is used for transactions involving sale of assets, stock, goods and services etc. It contains terms that guide the relationship between parties.
Employment agreement This is used when engaging an employee. It helps protect the parties legally.
Partnership agreement This is an agreement entered into when partnering with others for a set objective. It is also used when registering a partnership business to help define the partnership.
Lease agreement This a legal document used when leasing a property or item.
Service agreement This is entered with service providers by business owners. It helps define the relationship between the business owner and service provider.
Non-disclosure agreement This is used where either party has confidential information to share, and which is preferably not shared outside the parties to the contract.
Franchise agreement This is a contract under which the franchisor grants the franchisee the right to operate a business, offer, sell, or distribute goods or services identified or associated with the franchisor's trademark. This applies in situations that involve intellectual property.
Joint venture agreement This is a contract that is required when two or more parties seek to carry out a particular task involving the development of a single enterprise or project.
Licensing agreement This agreement is used when one party (the licensee) wants to use and/or earn revenue from the property of the owner (the licensor). The property here is usually intellectual.

Importance of Using Contracts for your Business

  1. Contracts help you to guarantee a standard business procedure and give clarity of your requirements.
  2. Contracts assist in achieving the desired goals and serve as proof for all the activities to be undertaken in the future.
  3. Contracts provide you with precise knowledge of the services offered by the third party and serve as legitimate proof of all the recordings.
  4. Contracts come with an NDA (Non-disclosure agreement) that protects and secures the concerned parties' confidential information.
  5. Drafting a contract helps you avoid misunderstandings that can lead to conflicts between the parties.
  6. Contracts help you take strict legal action against the people breaching the contract agreement.
  7. Contracts also help safeguard the employees from false promises and expectations that the third party may lay upon them.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.