Monthly Archives: October 2012

Contracts are the agreements, which can be made either orally or in written statements. Written agreements serve as legal documents, which can be enforced in the court of law. In order to prevent disputes or fraud, certain contracts must be in writing, according to law specifications. Here are the 3 types of contracts that must be in writing, as per the law.

1. Real Estate Contracts

Contracts related to the purchase, transfer and sale of property or land should be in writing. This hard copy of the agreement helps in protecting the rights of both buyers and sellers. Real estate contracts involve a number of terms, figures and negotiations, which must be stated in detail. This is helpful to resolve any kinds of disputes, arising in future. Property lease agreements, which take more than a year to complete and property transfers, upon death, must also be specified in writing.

2. Contract for Marriage

If a prenuptial agreement is involved in a marriage, then it is required to be put in writing. When the couple decides to end their marital relationship, this contract proves to be helpful to make right claims. Prenuptial agreement is mostly used, to protect the ownership of one’s assets and property, in the event of marriage termination. If the agreement is not in writing, then it becomes extremely difficult for the court to make decisions, by weighing the claims made by both sides.

3. Contracts as a Guarantor

An agreement which specifies you as a guarantor of another person; who is required to pay the debt or to perform certain duties on behalf of some other individual, should be in writing. This agreement is required to ensure that, as a guarantor, you fulfill the obligations specified. An example of guarantor contract is co-signing for house loan. This contract is also helpful to prevent any false claims, from the other party, that you agreed to pay more than the stated amount. This agreement also protects the individual, on whose behalf you agreed to provide financing, in case you don’t fulfill your obligation.

A real estate contract involves buying or selling a house or property. Familiarizing yourself with different types of contracts in real estate helps you in choosing the right one, according to your situation. Here we specify 3 types of contracts in real estate which are most popular.

1. Contract for Deed

If the buyer wants to purchase the seller’s property, then contract for deed agreement is signed. This type of contract is used, if the buyer is not able to make down payment or acquire loan from bank. This contract states that, the seller receives additional income as interest payments and can foreclose the contract, when the buyer defaults. In case of default, seller gets to keep the payments made upto date on interest, the deed and the property. More risk lies with the buyers, if they are unable to acquire funds from financial institutions.

2. Sale Agreement

This type of contract consists of the selling price and contract closing details of the specific property. Sale agreement states all the terms, negotiated between both the parties involved. This type of written agreement is useful in protecting the buyers and sellers, if any disputes arise. You must bear in mind that sale agreement is a final deal and it cannot be broken, if you want to go for other offers.

3. Exclusive Right to Sell

This type of contract is the most commonly used agreement between the seller and the estate agent, in which the broker has exclusive rights for specifying and selling the property, on behalf of the owner. This is used when you want to sell your property, with the help of a mediator. Exclusive right to sell contract, is beneficial to the owner because, the commission of the broker, depends on the deal of the sale. In order to receive good commission, the broker needs to obtain best possible price for the property.  Once you sign this contract, you have to pay commission to the broker, even when you make the sale yourself.

Franchise contracts are a great way of achieving success, but you should consider carefully, before signing the contract of becoming a franchise owner. Here are the 10 things about franchise contracts you should know, before turning franchisee.

1. Required Intellectual Stimulation

Most of the franchises consist of fundamental service and retail businesses, which does not require much sophistication or high qualification. People who can handle finances, as well as offer customer service are preferred.

2. Other Priorities

Franchise agreements specify that, you devote all your working hours to franchise operations. You may not have the time to pursue any of your other interests.

3. Dealing with Public

As a franchisee, you need to deal with public and sometimes it can get rude, neurotic and downright vicious. You should think how you can handle it all, without taking it personally.

4. Other Corporate Opportunities

If you are a young, dynamic and talented person in your field, then you have chances of getting a corporate job, when there is improvement in economy.

5. Territory Restriction

As a franchise owner, you are not allowed to move out of your territory or start units in other location or advertise outside your territory. You should ensure that you know the place well.

6. Franchise Costs

An ideal franchise will present all the costs of starting and running your franchise, for a year or two. You should see that franchise’s UFOC clearly specifies all costs and look out for any hidden costs, which will not be stated in UFOC.

7. Business Model

Nowadays, companies start franchising, even with the presence of just two to three outlets in the same area. You should keep in mind that, if a franchise concept works well in some part, it does not mean that, it will do well in other location also.

8. Franchise Management

Ask for detailed information about key managers, to know about their experience and their way of handling difficult situations in business.

9. Right Location

It is better if you visit different types of franchise outlets, specially the hugely successful ones before owning a franchise, to assess about their location. It helps you decide about your ideal location.

10. Future Plans

You should find out the future plans of franchise, such as whether they plan to start company-owned outlets instead of franchise outlets; ensure that they can’t start company-owned stores within your territory.

Employment contracts are agreements that establish an employee-employer relationship. These include the statements and terms including salary, working hours, etc. during the period of employment. Mainly, three types of employment contracts are used by most of the businesses.

1. At-Will Contract

This type of contract specifies that the agreement is at the will of the employer or the employee and it can be terminated by either party, any time, even without a genuine reason.

These types of employment contracts are popularly used in the United States, as they provide flexibility to both employer and employee. Unless it is indicated in the contract, it is presumed as at-will employment contract in most states of U.S.

Although it is not necessary to provide agreement termination notice in at-will contracts, it is a professional conduct, to provide written notification by the employer or the employee, prior to the termination of contract.

2. Fixed-Term Contract

In this type of employment contract, a specific time period is stated, which is agreed by both the parties involved. This contract terminates on the date, which is mentioned in the contract and does not require any prior notification. If both employer and the employee are in terms to continue with the employment relationship, a new contract has to be drafted and executed.

These contracts are mostly preferred by those, who want to enter into an employment association, for a certain purpose or requirement such as a promotional activity, event planners, or on temporary basis to cover for other employees.

3. Executive Contract

This is a contract of employment between an employer and a high-ranking employee such as a vice president or an executive officer. Executive contracts tend to be more complex, because of the presence of high negotiations. Employees of high-level are considered valuable to the organization. These contracts include information about stock options, base compensation, incentives based on performance, successors and Executive contracts cover topics such as performance-based incentives and successors.

A written contract is a legal document, which provides the individuals in business, with statements about what is expected by the involved parties and how to deal with negative situations. It is very important to know what is the importance of contracts to business, before entering into one.

Facts

Business contracts generally include a process of negotiation, in which all the terms that must be abided by each party are stipulated. Some contracts can also include measures for any modifications or additions to the agreement. Majority of businesses use contracts, in order to maintain specific level of service.

Clarity

A business contract clearly specifies the terms and conditions of a particular business transaction, including sales, delivery of products and services. This helps in avoiding the occurrence of misunderstandings between the concerned parties, in the absence of an agreement. Statements made in oral contracts, may be forgotten, but with a written contract, you can always look up, when a certain situation is encountered.

Fixed Cost

A contract states an agreement between two parties for selling a product or service, at a fixed price. These agreements ensure that a business obtains the specified economic resources, in the defined period of time, at specified price. A fixed cost contract may prove to be detrimental for the company, if the economic resources decrease in future.

Obligations

Service contracts specify the duties and responsibilities of the companies involved. These types of contracts are used, when a company collaborates with other business or organization, to carry out services like call-center operations, technical support, maintenance, etc.

Expert Insight

Before signing any contract, you should take legal advice from an experienced attorney. Large businesses may take advantage of smaller businesses, by considering the executive’s willingness to undertake business operations. Contracts can also consist of some legal terms, which may not be understandable to business owners. Attorneys will be able to provide clear information regarding the contract.