Understanding the different types of business contracts is essential for protecting your business and avoiding costly disputes. From partnerships and joint ventures to NDAs, service agreements, and leases, the right contract sets clear rules, safeguards your interests, and keeps everything legally compliant.
Partnership Agreement
A Partnership Agreement sets the legal framework for how a business partnership operates. Without it, the Partnership Act 1890 applies by default. It is an outdated regime that rarely suits modern business.
This agreement defines who does what, how profits are split, who puts in the capital, who makes decisions, and how exits are handled. It should also cover how fights are resolved (think mediation or arbitration) and what happens if someone walks away or the business folds.
In the UK, the common setups are General Partnership (GP), Limited Partnership (LP), and Limited Liability Partnership (LLP). In a GP, partners are on the hook for debts. In an LLP, liability is limited, much like a company. Profits still go through personal tax via self-assessment.
Free templates exist, but complex or high-value arrangements require a solicitor’s draft. A template will not provide sufficient protection.
Joint Venture Agreement
A Joint Venture Agreement formalises collaboration for specific projects such as property development, technology builds, or market expansion. It sets out who brings what, who controls what, how profits are shared, and how disputes are handled. Without it, responsibilities, liabilities, and profit entitlements remain unclear and open to dispute.
In the UK, JVs can be a brand-new company (incorporated JV) or a looser setup like a consortium or alliance. Ownership does not need to be 50:50. Splits can be 60:40, 70:30, or whatever works commercially. The smart clauses cover funding, management, exit strategies, and governing law.
The commercial benefits include shared costs, quicker market entry, and access to specialist expertise. But make no mistake. You are still liable for your agreed share of debts. A watertight JV agreement under English law keeps everyone honest and the project running smoothly.
Franchise Agreement
A Franchise Agreement lets someone trade under an established brand but it is a highly regulated, one-sided arrangement designed to protect the franchisor’s brand. In the UK, these agreements lock down territory, royalties, training, operating standards, trademarks, renewal, and exit terms.
They are long-term, usually non-negotiable, and heavily tilted toward the franchisor. Specialist legal advice is essential before signing. It protects the franchisor’s brand, but the franchisee takes on strict obligations. Prospective franchisees should understand the legal obligations in full before committing.
Employment Contracts / Employment Agreement
An Employment Contract is the foundation of every employer-employee relationship. It covers pay, working hours, holiday, duties, notice, and benefits.
UK law requires a written statement of employment particulars by day one without excuses. Whether it is permanent, fixed-term, part-time, or zero-hours, the contract has to comply with employment law.
A clear contract reduces disputes, locks in compliance, and makes everyone’s rights and obligations clear. Failing to issue a proper contract leaves employers exposed to statutory breaches and disputes.
Contractor Agreement
A Contractor Agreement (a.k.a. Independent Contractor Agreement) draws the line between a contractor and an employee. It confirms in legal terms that the contractor is self-employed, not an employee. That matters for tax, liability, and employment rights.
These agreements set out scope of work, deliverables, fees, timelines, confidentiality, IP ownership, and how it all ends. You will see them everywhere, from IT and consultancy to construction.
Done right, they help avoid disputes, keep IR35 compliance tight, and set expectations from day one. Poorly drafted agreements expose businesses to tax liabilities and employment law disputes.
Non-Disclosure Agreement (NDA)
An NDA is the legal mechanism for protecting confidential information. Businesses use them in negotiations, employment, JVs, IP talks, and product development.
They can be mutual (both sides share and protect) or one-way (only one side shares). A solid NDA defines what is confidential, what can be done with it, and what is excluded (like public knowledge).
They are enforceable under UK law, but recent reforms (including the Victims and Prisoners Act 2024) mean NDAs cannot be used to silence harassment or abuse claims. NDAs must be carefully drafted and applied within legal limits, or they risk being unenforceable..
Non-Compete Agreement
A Non-Compete Agreement (or clause) restricts someone from jumping to a competitor or starting their own rival business after leaving.
In the UK, these are only enforceable if they are reasonable in time, scope, and geography. They must protect a real business interest such as clients, confidential info, or goodwill. Courts assess enforceability case by case, and overly broad restrictions are struck down.
Breaches can lead to injunctions or damages, but there is no guarantee. The government is also eyeing a three-month limit on employment of non-competes. Until then, draft carefully and get legal advice.
Licensing Agreement
A Licensing Agreement gives another party rights to use intellectual property such as patents, trademarks, copyrights, software, or trade secrets without giving away ownership.
The contract spells out scope, payment (fees or royalties), duration, termination, and, for brands, quality control. Licensing is how IP owners expand into new markets or monetise their assets without losing control.
Because the terms can be highly technical, specialist legal advice is a must. Poor drafting can result in excessive concessions or an unenforceable agreement.
Service Contract
A Service Contract sets the terms between a service provider and a client. It defines the work, fees, timelines, confidentiality, liability, and exit strategy.
In the UK, they are everywhere in consultancy, IT, marketing, and professional services. For bigger public projects, the government has its own Model Services Contract.
A clear, legally sound service contract is the basis for managing expectations, limiting disputes, and maintaining compliance.
Indemnity Agreement
An Indemnity Agreement shifts financial risk. One party agrees to cover specific losses, damages, or liabilities for the other.
You will find indemnities tucked inside sales contracts, leases, contractor agreements, and JVs. They can cover direct losses, legal costs, or defined risks. Example: a contractor indemnifying a client for damage on site.
Unlike a guarantee, indemnity creates a primary obligation. The indemnifier pays with no secondary fallback obligation. Because wording is everything under UK law, these agreements should never be signed without expert review.
Sales Contracts
A Sales Contract is the backbone of any deal between buyer and seller. In the UK, it usually covers goods or services, price, payment, delivery, warranties, and liability.
They are not always legally required, but they keep you in line with the Sale of Goods Act 1979 and consumer protection laws.
Key clauses typically include:
- Parties involved (buyer and seller)
- Description of goods or services
- Price, taxes (e.g. VAT), and payment terms
- Delivery terms and risk transfer
- Warranties, liabilities, and termination
- Dispute resolution and governing law
A well-drafted sales contract reduces risk, gives clarity, and provides legal cover whether it is B2B or consumer.
Lease Agreements
A Lease Agreement (or tenancy agreement) sets the rules between landlord and tenant. It covers rent, duration, deposits, rights, and obligations.
In the UK, common forms include:
- Assured Shorthold Tenancy (AST): standard for most residential lets.
- Commercial Leases: for offices, shops, warehouses.
- Licence Agreements: permission to occupy but no exclusive possession (e.g. student housing).
The key terms? Rent, repairs, permitted use, termination, and dispute resolution. While verbal agreements are legally possible, only a written lease provides enforceable protection for both parties. It protects both sides and ensures compliance with UK property law.