General business agreements for every company

Last Updated at: May 28, 2020
In April, 2020, The Kerala Government intimated the Kerala High Court about steps taken by them to ensure security of citizen-centric data during the COVID-19 pandemic. The Govt said that stringent provisions have been incorporated in the Non-Disclosure Agreement (NDA) with Sprinkler, the US-based tech giant, to ensure the same.


An agreement plays an important role in ensuring the interest of the stakeholders and that of the organisation are not raptured in the development process and company’s growth. . For proper functioning of a company, there are several agreements are made between the parties. The most important agreements for general business are: Owner agreement, Worker agreement, Supplier and Customer agreement and Non-Disclosure agreement.

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In the day-to-day functioning of an organization, there are various agreements that are reached between the parties to a contract. The most important agreements are:

    1. Owner Agreements: This describes the agreements made on ownership percentages, capital contributions, and salaries. An effective owner agreement contains details on how the company operates. wherein the owner, in case of a company in which there is one or more than one owner, decides to part ways.

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The four types of owner agreements are:

  • Operating Agreement – a legal document which provides a detailed connection between the company and its investors for the operation of a program to make investments.
  • Shareholder’s Agreement – it outlines the rights and obligations of the shareholders also known as stockholders.
  • Founder’s Agreement – it is the same as the owner agreement wherein the rights, liabilities and the obligations of the founders are listed out.
  • Partnership Agreement – the agreement effected between partners carrying on a partnership firm listing out the remunerations, duties, interests.

Owner agreements ensure that the owners, alike the employees of the organization are aware of their roles and responsibilities. As per the agreement, even if any one of the owners decides to part ways, then from that day onwards till its execution and after, the business keeps running without any hindrance.

2. Worker agreements: A worker agreement is also known as an independent worker agreement. A business might outsource its functions to independent contractors whose job ranges from designing website, managing database or performing the legal and accounting work. The independent workers are not full-time workers, but even then it requires that the terms and conditions are cleared out between the organization and these independent contractors. This is to make sure that no complications arise in the future.

In order to avoid such situations, there should be a contract in place that explicitly describes the relationship between the concerned parties.

3. Customer and supplier agreements: The customers are the “king” of every company, and it is their preferences that decide whether the company will operate in the market or not. The customers are an organization’s major source of revenue with the suppliers and the distributors next in line. A company is mostly dependent on the suppliers and the distributors for its product.

There should be a contract in place for avoiding any unwanted situations with suppliers as their withdrawal from the business might take a toll on all other functions.

4. Non-Disclosure Agreement: At times a company not only depends on its in-house marketing team for the publicity of its product. Often, it also hires freelancers for doing the job. While doing so, it discloses confidential information to such freelancers. To ensure that any confidential information is not misused in any way, it is suggested for a company to a Non-Disclosure agreement in place. An NDA will ensure that the freelancers and any such person hired by the company for any other reason, are aware of what their roles are and to what is it limited to.

Other agreements include bilateral agreements, executory contract, unilateral contract, unconscionable contract, adhesion contract and so on.

An agreement plays a vital role in ensuring that the interests of an organization and that of the stakeholders are not breached in the process of the development and growth of the company. Any disagreement can definitely, be drawn to a law of Court, but as the saying goes, wheels of justice take its own time to roll, it might end up wasting the resources of an organization. Thus, instead of taking the matter before the court, it is advisable for a company to have the required agreements in place so as to avoid unwanted situations and ensure that everybody gains from such a contract.   

Any disagreement can be drawn to a law of court, but it takes own time to give justice. This will end up wasting the resources of the company. Therefore, instead of going to the court , it is advised for the organisation to have the needed contracts in place. This ensures gain for everyone from the agreement and also avoids unwanted situations.