As an entrepreneur, freelancer or employee, protecting your work is key to sustaining a business. Clear and thoughtful contracts are a way to ensure you protect yourself, your business, and its assets. In a basic or foundational understanding, contracts are an agreement between two parties. Business contracts are no different than property leases or financial loans. They are a way to legally hold everyone accountable for meeting specific expectations set by each party.

I like to think of contracts as the starting point of communication and collaboration between two parties. Through the language of these agreements, one can clearly communicate needs, wants, values and expectations. As the contract is negotiated, the collaborative efforts and overall functioning of each party are also revealed. When appropriately managed and followed, contracts reduce business risks while increasing business efficacy.

You will negotiate many agreements in your business endeavors, some of higher importance than others. Below, I’ve highlighted a few contracts you’ll repeatedly encounter. Consider these three contractual agreements a trinity of sorts as you start your business.


Confidentiality Agreements

Confidentiality agreements are helpful in protecting the proprietary information of your business. That includes your ideas, content, strategies, and products. Essentially, it is a promise between you and another party that the physical and intellectual property of your business will be kept confidential. These are especially helpful if you have an invention you haven’t yet patented or an original work not yet copyrighted.

Agreements of this type are useful in the ideation phase of your business. As you share and build your ideas with friends and colleagues, an agreement like an NDA (Non-Disclosure Agreement) keeps your valuable information safe and confidential. Create a general confidentiality agreement early on that transforms with your business. If you are collaborating or sharing ideas with another business, you can create a mutual confidentiality agreement to preserve the exchange of information.


Partnership Agreements

When you intend to collaborate with another business or individual in any capacity, partnership agreements are effective in defining the rights and responsibility of each party. If you’ve ever hopped on a project for a specific task and felt your role transform into something that wasn’t originally established, this is for you. Make sure expectations are clear by outlining terms of the partnerships before any work is started. This helps avoid disagreements in the future.

There are a few key things to consider as you build out partnership agreements.

  • Understand the type of partnership being established. The terms and expectations change depending on what each party is bringing to the table.

  • Because this is a partnership, developing this document will require the correspondence of both parties. Make as many revisions necessary until you feel good about you or your business’ role as a partner.

  • Think ahead. Consider how profits and losses of the partnership will be distributed well before transactions are made.


Service Agreements

When you are not looking for a business partnership, just an exchange of services for compensation, a service agreement is ideal. Use this to outline obligations and ensure proper compensation for whatever services are being provided. These agreements are for freelancers, service providers, and independent contractors; not employees.

Service agreements are often not as complex as the others. The most important components of this agreement are underlining the scope of services being provided, a projected timeline, the expected billing/payment structure and termination clauses. Give a clear narrative of what you expect from a client and what they should expect from you.


What Protects Employees?
If you are working with a company as a full time employee, the specifics found in confidentiality, partnership, and service agreements are typically compiled into an employee offer letter. Businesses typically use offer letters as protection from any liability or misunderstanding between themselves and an employee. Before taking a position or promotion, make sure your offer letter includes details about the offered position, its roles and responsibilities, the salary and/or benefits, and the length of commitment.



Templates for these varying contractual agreements are available all over the internet and can be personalized. Replace templates with your language or work with a consultant if you need support articulating the specific needs and intention of your business. Most clients act in good faith, but you can protect your work by creating strong agreements that clearly outline your capacity and expectations.


Want to hear more from the author?  Dhaujee is participating in a special International Women's Day panel in Staples' Spotlight Space in Costa Mesa, CA along with 3 other dynamic women in the southern California business community, Balancing Your Time as a Business Owner and Professional. Click the link to learn more and reserve your spot.