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What are the Four Types of Business Contracts?

Businesses utilize contracts on a regular basis. If you are in business, you should always use written contracts rather than verbal contracts or handshake deals. Contracts are legally binding, so it is essential to include important elements that will protect you in the transaction. There are four main types of business contracts — leases, sales contracts, employment contracts, and general contracts. It is best to get legal guidance before you participate in any type of business contract.


Leases are contracts for the rental of either property or equipment. Real property leases are for the rental of buildings or land where you will locate your business. Equipment rental leases are contracts for the use of items that are necessary for your business. Property leases should include a definition of the rental space and how the renter is allowed to use the property. The lease should also state whether the tenant is allowed to make changes and, if so, under what conditions.

Businesses often need to rent equipment for their companies. You may lease equipment for your office, such as a copy machine, coffee machine, or phone system. A business may also need to rent large equipment for use as part of its service or product production. For instance, a company might need to rent a forklift, bulldozer, or other equipment.  An equipment lease should include the length of the lease, and how the equipment will be returned, among other things. The lease should also ensure that the lessee takes responsibility for damages or injuries that occur during use.

Sales Contracts

A sales contract is a legal document that transfers the title of property from one owner to another. A sales contract is commonly used in the purchase of a vehicle. The purchase order is often part of the sales contract. It outlines the specific goods or services that are part of the purchase. The contract also should specify whether a warranty or guarantee is included. Some sales are “as-is,” meaning that there is no return or refund allowed. A business should provide a sales contract to a buyer to ensure the legal transfer of the product.

Employment Contracts

An employment contract is a legal agreement between a business and an employee. Wisconsin is an “employment at will” state. This means that either party may end employment at any time and for any reason. For this reason, it may be advantageous for Wisconsin businesses to have contracts with their employees. An employment contract provides for how an employee can leave employment as well as any non-disclosure or confidentiality requirements. A business may also use an employment contract for independent workers who may provide services. A company may create a general employment contract that they utilize with all employees.

General Contracts

Contracts that do not fall into any other category are often categorized as general business contracts. A business may need a contract for any type of business arrangement. For example, if you want to sell a franchise, you will need to utilize a contract. Any time your business has a deal with anyone else, you should make sure that you have some type of written contract in place to cover the transaction.

Contracts are an essential part of all businesses and are used on a daily basis. However, if you do not take the time to properly write or administer a contract, you could find that it does not provide you with the protections you seek. Contact our legal team for assistance with business contracts at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online.

Published May 22, 2023
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