Different common types of business contracts that exist in Canada

Contracts come up often during the course of business. Common types of business contracts include employment, land/lease/rental contracts, contracts with suppliers and contracts with customers.

Employment contracts. Contracts with staff for either professional or nonprofessional services appear frequently. Employment contracts range from salary stipulations through right-to-work arrangements. They state how the employee will be compensated and what actions they must perform. Any oral agreements concerning compensation for overtime or benefits should be included in these contracts. Any performance-based incentives or bonuses should be included as well. Employers should include termination clauses befitting the position. For example, morality clauses are less common, but in some instances should be included if the employee is a direct representative of the company.  

Land/Lease/rental contracts. These contracts are between business owners and landowners over usage of a building or parcel of land for business purposes. Rental contracts identify the rights and requirements of tenants and landlords. They address such instances like when a landlord sells or loses the title to a building (due to bankruptcy, etc). Commercial leases should provide an adequate time allotment to avoid constant renegotiation that can impede on owner’s ability to conduct business.

Supplier contracts. Contracts with good suppliers add a sense of stability to a business. These allow a business owner to know what they are getting and whom they are getting it from and at what price. The contract benefits suppliers by binding the business to always purchase from them instead of their competitors.

Customer contracts. Contracts with customers provide both parties written assurance of what oral agreements the other has made (if any). Although oral contracts can be binding, having a signed copy allows either party to revisit the agreement in the case where the other did not perform as agreed upon (either the services rendered were not as advertised or the compensation for services was not adequately made). An example of a contract between a business and customer is a tire store warranty stating that a replacement tire will be issued without cost if the purchased tire explodes within 30 days of installation.

Lawyer can draw up an effective, template-style contract for each situation. This allows business owners to employ contracts in a timely manner instead of having a new one drawn up for each instance. For example, having a standardized agreement for customers only requiring a name, date, description of services rendered and a signature saves lots of time and ensures there are no questions over the contracts validity should a dispute arise. This works well for general employment contracts as well.