Business owners are certain to encounter a variety of contracts throughout the life of their business. Whether a business is just starting out or expanding, understanding the types of commercial contracts that may be needed – and what they should include – is essential for protecting business interests and laying a solid foundation for business relationships.

Here we look at some of the most common types of commercial contracts used by small and medium-sized businesses, with some practical tips on what to look out for.

1.    Contracts for the Supply or Goods or Services

These contracts set out the terms under which goods or services are supplied – whether you're the supplier or the customer. They typically cover:

• The scope of goods/services
• Delivery and payment terms
• Warranties and quality standards
• Liability and indemnity provisions
• Termination rights

Top Tip : Always ensure service levels and performance standards are clearly defined to avoid disputes. If necessary, get legal advice on a contract before signing it.

2.    Terms and Conditions

Your standard terms and conditions (T&Cs) are a vital part of doing business. They govern each transaction and help manage your legal exposure.

• T&Cs of sale: used when you sell products or services
• T&Cs of purchase: used when you're the buyer

Top Tip : Ensure your T&Cs are properly incorporated into your contracts (e.g., referenced in your quotes and invoices) to ensure they are enforceable.

3.    Confidentiality (Non-Disclosure) Agreements

If you’re discussing sensitive business information – whether with potential partners, suppliers, or even employees – a confidentiality agreement (often called an NDA) protects your confidential and sensitive information.

Top Tip : Make sure the agreement clearly defines what is confidential and for how long the obligations last.

4.    Shareholders’ Agreements

If your business is structured as a company with multiple shareholders, a shareholders’ agreement is key to regulating the relationship between the shareholders, their rights and responsibilities, and how major decisions are made. It typically covers:

• Voting rights
• Share transfers and exit strategies
• Dividend policy
• Dispute resolution

Top Tip : This is a private contract, unlike your articles of association, and can provide more tailored protection.

5.    Employment Contracts and Consultancy Agreements

If you employ staff or engage contractors, you need written agreements that set out roles, responsibilities, and expectations. It is a legal requirement to have employment contracts in place, and well drafted employment contracts can provide protection for your business around probation periods, intellectual property, notice periods, confidentiality and post-termination restrictions amongst other things.

Top Tip : Ensure your contracts comply with employment law and clearly distinguish between employees and contractors, as the legal rights and obligations differ.

6.    Joint Venture or Collaboration Agreements

When two or more businesses collaborate on a specific project or commercial goal, a joint venture or collaboration agreement sets out each party's contributions, roles, and profit share.

Top Tip : Define exit strategies and what happens if the venture doesn’t go as planned.

7.    Licensing Agreements

These are used when you want to allow another party to use your intellectual property (such as software, branding, or technology) under specific terms.

Top Tip : Clarify what rights are being licensed, the territory, duration, and any royalty or licence fees payable.

Final thoughts

Having the right contracts in place isn't just about legal protection – it’s about clarity, professionalism, and building strong commercial relationships. While templates can be a starting point, every business is different, and off-the-shelf documents often fail to capture the nuances of your specific arrangements.

If you're unsure about what contracts your business needs or want to review existing agreements, seeking legal advice can save you significant time and cost down the line.

If you have questions about any of the contracts mentioned above or need support drafting or reviewing your commercial agreements, feel free to get in touch. Contact Sarah Naylor on 01302 320621 or at sarah.naylor@switalskis.com .