biBerk Business Insurance Offers Insights on the Different Types of Business Contracts, Clauses & Tips for Negotiating

By: Prodigy

August 18, 2025 at 13:16 PM EDT

08/18/2025, Omaha, Nebraska // PRODIGY: Feature Story //

Business contracts are an essential part of operating a small company. These agreements are crucial for many reasons, from managing risks to ensuring clarity in business relationships.

This article explains what business contracts are and how, along with having adequate business insurance, they can help protect your company. It provides high-level information on this important subject, but you should talk with an attorney about any contract you’re drafting or that you’ve been asked to sign. Contracts are binding legal agreements, so it’s essential to understand the implications before you enter into them. Read on to learn more.

Businesswoman shakes hands with a colleague

What is a business contract?

A business contract is a legal agreement that outlines the rights and responsibilities of the people involved, who are called the parties. Contracts are legally binding, meaning that courts recognize them and can enforce compliance. In other words, they can require you to follow through with whatever you’ve agreed to in the contract. If you don’t meet your obligations under this type of agreement, a court can find that you’ve committed what’s called a breach of contract, and there are legal consequences.

Business contracts can cover any aspect of your operations and your interactions with clients or customers, vendors, business partners, employees, and others. The document you sign is essentially a set of rules for how you’ll interact with the other party or parties to the agreement.

Different types of business agreements/contracts

The kinds of agreements a company is involved in will vary based on the type of business, how it operates, who its clients or customers are, and several other factors. Some of the most common examples of business contracts include:

Lease agreements
Consulting contracts
Service agreements
Supply contracts
Statements of work (SOWs)
Sales agreements
Employment contracts
Non-disclosure agreements (NDAs)
Maintenance contracts
Purchase orders
Advertising agreements
Real estate contracts
Independent contractor agreements
Subscription agreements
Partnership/joint venture agreements
Non-compete agreements
Licensing agreements
Franchise contracts
Distribution agreements
Agency agreements
Confidentiality agreements
Loan agreements

These are just some examples of business contracts. There are lots of others, including many types of industry-specific business agreements or contracts.

What are business contract clauses?

Have you heard the term “clause” in the context of business contracts and wondered what it means? Clauses are essentially the building blocks of contracts. Typically, they are distinct sections focused on specific aspects of the agreement.

For example, an indemnification clause requires one party to compensate the other for specified damages or losses. A severability clause explains that when part of a contract is found invalid or unenforceable, the other sections remain valid and enforceable.

Another clause found in most contracts covers when and how the parties can end the agreement. A termination clause also typically lists the consequences for each party if they end the contract prematurely.

If someone has asked you to sign a contract, it’s vital to understand what each clause means and how it affects your relationship with the other party. It’s a good idea to have a lawyer review a contract before you agree to its provisions. They can ensure that entering into the agreement is in your company’s best interests and explain the legalese in simple, easy-to-understand terms.

Negotiating contracts for your small business

It’s important to understand that you have the right to negotiate the terms of any contract you’re considering. That means you can propose a change if there’s something you don’t like about the agreement.

Sometimes, that involves removing a provision or an entire section from the contract. In other cases, you might just want to modify some aspect. For example, you might propose a change to the payment terms, such as the timing, discounts, or late-payment penalties. Or, you might want to clarify what you’ll do for the other party, including responsibilities or deliverables for a project. Keep in mind that if you’ll be providing advice to a client, you should never guarantee the results of following that advice.

Overall, the point is to remember that while a contract is set once you sign it, it’s a common business practice to request changes before finalizing it. The other party might decline the request or counter with a change that’s more favorable to them. That’s just part of the dance. But you should feel comfortable seeking terms that are in your company’s best interests.

Things that could come up when creating a contract

If you need to create a contract between your business and another party, it’s essential to develop the agreement carefully. The first and most important step is to talk with an attorney. While you can technically create contracts on your own, doing so is risky. If your agreement is inaccurate or incomplete, it can come back to haunt you.

When you work with a lawyer to draft a business contract, they ensure it contains the appropriate language to create a legally binding agreement that protects your company. In doing so, your attorney will:

Identify the parties to the contract. Lawyers use the full legal names of the parties to a contract to avoid any ambiguity. You might know the other party by a more informal name, but you have to use their legal name in your document.
Define the contract’s terms and conditions. This is the heart of the agreement. It has detailed descriptions of each party’s responsibilities under the contract in clear, unambiguous language. That includes the cost of agreed upon services and the timing of payment. How the parties can end the agreement and whether any portion of payments made are refundable are also typically spelled out here.
Review the draft with you. Few contracts are perfect as initially written. You and your attorney should read the draft carefully and make changes as necessary. Once you’re confident the document meets your needs, you present it to the other party.
Help you negotiate the terms. As mentioned above, it's common for there to be some back and forth about the various aspects of a contract. You can streamline the negotiation process by thinking about where you can be flexible and where you can’t or won’t agree to modifications.
Have you sign the contract. When you and the other party are happy with the contract, you both sign it.

As you can see from the steps above, getting to the point where you have a signed contract can take some time. Consequently, it’s really important to plan ahead so that the agreement is in place before the project or other engagement gets underway.

Beyond contracts: Protecting your company with small business insurance

To protect your company, you’ve got to enter into business contracts cautiously. Another critical step is carrying insurance for all the risks you face.

With biBerk, you can get instant quotes and purchase policies whenever it’s convenient. If you don’t have adequate coverage, take action today.

About biBerk Business Insurance

biBerk can help you with all your small business insurance needs, including: commercial auto, general liability, property and liability, umbrella, and workers’ compensation. https://www.biberk.com

Media Contact:
Rakesh Gupta | 402-408-2870

Source: Prodigy.press

Release ID: 1749754

Original Source of the original story >> biBerk Business Insurance Offers Insights on the Different Types of Business Contracts, Clauses & Tips for Negotiating

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