There are so many things that could go wrong in a business. One day, you are making deals and shaking hands with a business partner or an investor, but the next day you two are facing each other in court because one party failed to fulfill what has been agreed on. However there is a downside: you both did not put your agreement into writing, therefore, all parties lose and never recover what was lost before the agreement before was made.
An agreement is defined by Merriam Webster as a harmony of opinion, action, or character and an arrangement as to a course of action. In business, it is defined as a statement, either oral or written, where an exchange of promise has been agreed upon by two or more parties.
A business agreement could be based on anything related to business. For example, it could be an agreement wherein two business would not be selling the same products, it could be a verbal understanding between the management and the employees’ union on a salary increase, or it could also be an agreement between business owners and investors for the company’s expansion project. As long as the element of having a harmony of opinion, action, or character is present, it is already considered as an agreement. You may also see the Website Hosting Agreement Checklist Examples.
As previously mentioned, agreements in business cover almost the entire aspect of the business (i.e. employment, marketing, human resource, finance, partnership, acquisition, mergers, etc.). Agreements can be used as a regulator in which business organizations can benefit from.
An agreement can either be expressed or implied. An agreement is expressed when one party directly states their offer and the offer is then expected by the other party. An agreement can also be a single promise or a group of promises. For example, it is considered a single promise when one party does not sell the same product of the other party. One example for a group of promises is that aside from the party not selling the same products as the other party, the first party also promised to sell at a distant location (10km or more) from the the other party. You may also want to know why Business Associate Agreement Templates are Useful.
For two or more parties to create a binding agreement, the intention of both parties should also be both distinct and similar. Meaning, there are some terms that are distinct to one party and there are also some terms wherein they both share the same terms.
Many would get confused between agreements and contracts. When in doubt, keep in mind this statement: “All contracts are agreements, but all agreements are not contracts.” You may also see the 10 Sales Agreement Samples.
An agreement is defined as a concept that includes an arrangement or a common understanding between two or more parties. It also includes the rights and responsibilities of each party with respect to the other party.You may also see the Checklist – The Franchise Agreement.
A contract is defined as an agreement that is enforceable by law. Agreements and contracts are more or less the same, but contracts ensure the safety of assets of both parties as they are legally binding. You may also want to know the Key Differences Between Agreements and Contracts.
Agreements in businesses cover a lot of aspects and because of that, it resulted in many different kinds of agreements. Here are some of the common examples of agreements in businesses. As mentioned, business agreements can cover the entire spectrum of business activities. Some common examples of different business agreements include:
A partnership agreement, as the term suggests, is an agreement between two or more individuals or businesses to start or franchise a business, or to invest in a start-up or market security (bonds, stocks, mutual funds, etc.). It can either be short-term or long-term depending on the agreement of both parties.
An indemnity agreement is defined as a contract in which one party would agree, or in other words, “hold harmless” the other party for possible damages that would result from an agreement.
A non-disclosure or confidentiality agreement is a type of agreement that outlines the confidential information that both parties are willing to share or disclose with each other (i.e. product and supplier information, financial statements, business operations, etc.).
An acquisition agreement is where one company takes over another company, acquiring and absorbing all of its assets (products, services, stocks and other securities, employees, stores or factories, etc. ) as well as liabilities (debt, payables, etc.).
This kind of agreement lays out the limiting activities that both parties (typically businesses facing strong competition) have agreed on.
Here are other kinds of business agreements:
Here are some of the things that are addressed in agreements:
We hope this article gave you more insights about what an agreement is.