Business Agreements
BUSINESS AGREEMENTS
Business Agreements play a major role in every business. Without an agreement, the business deal is not valid. In General, the Agreement Which happens when the offer is made between the parties. The agreement which acts as evidence for validating the contract. This helps to prevent the breach of the contract and avoid the persons from the commercial losses. In this article, we are discussing the different types of agreements which are used for the different specified works.
BUSINESS AGREEMENTS
An agreement is defined as the promise which is made by one party to the others. The agreement may be valid only if it fulfils the essentials requirements. The consideration is essential to both parties.
Agreement = Offer + Acceptance
As per section 2(e) of the act which defines the term agreement as that of every promise and every set of promises, forming the consideration for each other.
ESSENTIALS OF AN AGREEMENT
- There should be two or more parties to form the agreement.
- The Offer and acceptance shall be made between them.
- The motive and objective of the agreement is for lawful purposes.
- There should be free consent.
- The party shall not be an unsounded mind.
These are the certain basic essentials for an agreement.
KINDS OF AGREEMENTS
The agreements may be two kinds.
- Oral Agreement
- Written Agreement
Oral Agreement
The oral Agreement is also called the spoken agreement which the both parties agree to perform by the Oral words. Basically those agreements are made for simple works. That it may not perform any monetary considerations. In this oral agreement we can not provide supporting evidence in court during the breach of contract.
Written agreement
For most of the contracts the written agreements which plays a major role for acting the supporting evidence during the breach of contract, in order to prevent the parties from the financial losses. Even the company recruits the candidates by using the appropriate agreements to secure their businesses.
Basically the written agreements can be more certain and easily enforceable when comparing to the oral agreement,
- It clearly outlines the overall contract duration, payments, parties involved and the dispute resolutions.
- The written agreement which helps to secure the parties and their obligations.
- The written agreement which provides the party to claim easily when the other parties breach the contract.
- The written agreement which plays a major role in supporting evidence in the court if the criminal dispute is raised between the parties.
The agreement should be made based on our convenience with the legal requirements. There are a number of agreements there. From that the commonly used agreements by the Companies, individual for their business are,
Those are :
- Rental Agreement
- Security Agreement
- Franchise Agreement
- Indemnity Agreement
- Warranty Agreement
- Supplier Agreement
- Joint Venture Agreement
- Mortgage Agreement
- Distributors Agreement
- Non Disclosure Agreement
- E commerce website terms and conditions
- E commerce privacy policy
- MOU
Before initiating your are entering in the company business, Don’t forget to register your company under the suitable company registration under the Companies Act of 2013.
01 - Private Limited Company
A private limited company is run by the private person for the small or medium size business entity. The private limited company does not offer any shares to the open markets or to the public and also limits the liability of the Shareholders.
Basically the private company is owned by one individual who is only responsible for all the assets for the business operation in the company. He can manage all the directors and shareholders of the company and have a separate legal structure from others. The size of the business may be small or medium.
Eligibility criteria:
- Minimum 2 Shareholders and maximum 200 shareholders
- Minimum 2 Directors
- Minimum 1 lakh of paid-up share capital
- Office space in India
The Registered Private limited company should be identified by the suffix “ Pvt Ltd” after the company name. Eg: JK roadway Pvt. Ltd. and Nixcorn Pvt. Ltd.
02 - Public Limited Company
A Public Limited Company is a separate legal entity with the public at large as shareholders. For doing business to an outsized extent, the finest preference would be a Public Limited Company. The public limited companies in India are solely permitted to trade on the stock exchanges and congregate enormous capital from public investors. Thus the Public Limited Company is listed on a stock exchange.
Eligibility criteria:
- Minimum of three Directors and Maximum of fifty Directors.
- A minimum of 7 shareholders is required.
- Minimum 5 Lakhs of share capital.
It has limited liability and also offers shares to the public through the national stock exchange. It provides huge benefits to the people compared to the Private Limited Company.
03 - One Person Company
A One Person Company has just one member, who started the company and all the rights and decisions are associated with him.. A one-person company is classified as a private limited company under Section 3 of the Companies Act, even though there is only one person involved in the business. Moreover, an OPC is covered by all clauses pertaining to a private limited company, unless an independent clause specifically states otherwise.
BENEFITS
- It provides all the advantages of a private limited company, including perpetual succession, protection of personal assets from business liabilities, and status as a distinct legal entity.
- One Person Company's primary goal was to promote entrepreneurship and the corporatization of microbusinesses.
- Minimum 5 Lakhs of share capital.
04 - Sole Proprietorship
A sole proprietorship stands as the most common and traditional form of business, not only in India but globally. A Single owner can perform all the activities in the company. The presence of directors or shareholders is not permitted; the business is solely owned by one person.
The proprietor bears exclusive responsibility for both profits and losses within the firm. Sole Proprietorships are privately owned entities, maintaining confidentiality about company details. Unlike publicly traded firms, they are not obligated to disclose information publicly.
05 - Limited Liability Partnership
A limited liability partnership is an upgraded form of partnership firm the LLP which has as a feature of limited liability from a private limited company and flexibility from a partnership firm.
Who Preferred LLP?
The LLP is preferred by Professionals, and micro and small businesses which are family-owned or closely held.
Eligibility criteria
- At least 2 partners are required
- At least 2 designated partners are required
- Office location should be within the territory of India
- No minimum paid up capital but each partner needs to contribute the capital of LLP.
A limited Liability partnership offers the benefit of “limited liability” to its owners and at the same time, it requires very minimal maintenance.
06 - Partnership Firm
Partnership Firm registration in Chennai, the business arises when two or more people come together to carry out a business to achieve their common business goals.
Indian Partnership Act of 1932 defines a partnership as “the relationship between two or more persons who have agreed to share in the profits of a business conducted by all of them or any of them on behalf of/acting for all”.
BENEFITS
- Partnership firms are flexible to operate.
- The partners of the firm equally share the profit and losses of the business.
Conclusion
A company should be more flexible to adapt to run our business. In the nature of our business, we need to select the suitable company to run our business whether it may be the private, public, sole proprietorship, OPC, LLP and partnership. For every company the registration grants the protection for your company and supports your business. It is more important to consider the causal factors before institution your company business.
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