A contract is a legally binding agreement.

It is created when there has been:

• an offer
• an acceptance of the offer
• the payment of consideration (usually the price of goods or services supplied), and
• an intention indicated by the parties to enter into a legal relationship.

Many types of contracts affect small business. There are contracts with customers on the one side, and with suppliers of products and services, on the other.

Employment contracts are also legally binding.

It is important to establish a system to record and securely store agreements with customer, suppliers and employees. These documents may need to be produced in the event of a dispute.

A contract can be as simple as a quote signed by the customer.

It is not essential for all legally-binding agreements to be in writing however it does help in the event of a dispute or to provide written evidence of the terms of an agreement.

In some instances however, a contract must be in writing. For example, contracts for the sale of land and loan, lease or rental agreements.

Business owners entering into binding agreements should be aware of all the legal risks and implications. A good solicitor will provide advice.