Contract Basics Document Templates

25 Types of Business Contracts (+ Free Templates for Each)

First published: May 15, 2024 Last updated: August 28, 2026 11 min read

Contracts get classified three different ways: by legal structure (how the contract is formed), by pricing structure (how payment works), and by purpose (what the contract is actually for). This guide covers all three, so you can identify exactly what you're looking at and find the right contract template to send for signature with Papersign, free electronic signature software, in minutes.

Bilateral vs. unilateral contracts

Every contract is either bilateral or unilateral, and this is the most fundamental split in contract law.

A bilateral contract is formed when both parties exchange mutual promises. According to Cornell Law School's Legal Information Institute, each party is both an obligor on their own promise and an obligee on the other party's promise. Sales contracts, employment contracts, and lease agreements are all bilateral: the buyer promises to pay, the seller promises to deliver, and both are bound the moment they sign.

A bilateral contract requires two signatures

A unilateral contract is a one-sided promise that's only accepted through performance, not through a return promise. A reward offer ("$500 to whoever finds my dog") is the classic example. The offeror is bound only once someone actually performs the requested act.

Bilateral contracts make up the overwhelming majority of business agreements. Unilateral contracts show up in more specific scenarios: rewards, contests, promotions, and certain insurance and referral arrangements.

Express vs. implied contracts

This split is about how the terms were communicated, not who's obligated to whom.

An express contract has its terms stated outright, either in writing or verbally, at the time the agreement is made. Cornell Law requires a definite offer, unconditional acceptance, and consideration, all clearly communicated. Most business contracts, especially anything worth signing, are express.

An implied contract (specifically an implied-in-fact contract) has no stated terms. Instead, it's inferred from the conduct and circumstances of the parties. If you order a coffee and drink it, you've entered an implied contract to pay for it, even though nobody said a word about price. Implied contracts still require the same mutual intent to be bound as express ones, but they're proved through conduct rather than words.

For anything with real money or risk attached, default to an express, written contract. Implied contracts are harder to enforce simply because there's no document to point to when something goes wrong.

Void vs. voidable contracts

This distinction matters when something is wrong with the agreement itself.

A void contract has no legal effect from the moment it's created. It never existed as an enforceable agreement, usually because it was for an illegal purpose or missing a required element like consideration. Neither party can enforce it.

A voidable contract, on the other hand, is valid unless and until the party with the legal right to reject it chooses to do so. A contract signed by a minor is a common example: it's valid, but the minor has the option to affirm or reject it. Voidable contracts remain enforceable against the other party until the protected party exercises their right to walk away.

The practical difference: a void contract was never worth the paper it's on. A voidable one is binding right up until someone with standing cancels it.

Fixed-price contracts

Now for the classification most guides on this topic skip entirely: how the contract structures payment.

A fixed-price contract sets a single, agreed total price for the entire scope of work, regardless of what it costs the seller to deliver. The Federal Acquisition Regulation (FAR) Part 16, which governs how the US government classifies procurement contracts, places fixed-price at one end of the spectrum specifically because it puts full cost risk on the party doing the work.

Fixed-price works best when the scope is clearly defined upfront. A logo design project, a fit-out of a defined office space, or a one-off marketing campaign with agreed deliverables are all good fits. If the scope changes mid-project, someone has to request a RFP and renegotiate the price, which is the main downside.

Cost-plus contracts

A cost-plus contract reimburses the seller for allowable, documented costs and adds a fee or margin on top. FAR Part 16 details several cost-reimbursement structures built around this model, and business.gov.au's guide to pricing strategy describes the same approach for everyday Australian businesses: calculate your total costs (materials, labour, overheads, tax) and add a mark-up.

This model shifts cost risk onto the buyer, since they're covering whatever the job costs. It's common in construction, R&D, and any project where the scope can't be fully defined until work is underway. The trade-off is that the buyer needs genuine trust in the seller's cost reporting, since the final bill isn't fixed.

Time-and-materials contracts

A time-and-materials (T&M) contract bills the buyer for hours worked at an agreed rate, plus the cost of materials used. It's effectively a cost-plus structure applied specifically to labor, and business.gov.au describes the same mechanic under its "charge per hour" pricing method: calculate an hourly rate that covers wages, superannuation, leave entitlements, and tax.

T&M contracts suit work where the scope is genuinely unclear at the start, like ongoing IT support, consulting retainers, or repair work where you don't know what you'll find until you open things up. The risk sits mostly with the buyer, since hours can run over estimates. Many T&M contracts include a "not-to-exceed" cap to limit that exposure.

Unit-price contracts

A unit-price contract sets a fixed price per unit of work or per item, with the total contract value depending on the quantity delivered or completed. FAR Part 16 recognizes unit pricing as its own structure, distinct from a single fixed-price total, precisely because the final quantity isn't always known when the contract is signed.

This structure is common in construction (price per cubic meter of concrete, per linear meter of fencing) and bulk supply agreements (price per unit shipped). It gives both parties price certainty per unit while leaving the total flexible to match actual volume.

Comparing the four pricing structures

Contract type	How payment works	Best for	Risk profile
Fixed-price	One agreed total for the whole scope	Clearly defined, unlikely-to-change projects	Seller carries cost risk
Cost-plus	Reimbursed costs plus a fee or margin	Projects where scope isn't fully known upfront	Buyer carries cost risk
Time-and-materials	Hourly rate plus cost of materials	Ongoing or open-ended work (support, consulting)	Buyer carries overrun risk
Unit-price	Fixed rate per unit, total varies with quantity	Work billed by volume (construction, bulk supply)	Shared, tied to final quantity

Contracts for HR teams: hiring & onbaording

Service agreement

Purpose: Outlines the terms of service between a provider and a client.
Key elements: Scope of services, payment terms, termination clauses.
Example: A company hires a marketing agency to run its digital advertising.

Consulting agreement

Purpose: Governs the terms of consultation or advisory services.
Key elements: Scope of work, duration, compensation.
Example: A business hires an outside consultant for market analysis.

Employment contract

Purpose: Specifies the terms of an employee's role with a company.
Key elements: Job responsibilities, salary, benefits, confidentiality clauses.
Example: A tech company hires a software developer. Read our full breakdown of employment contracts for what to include.

Independent contractor agreement

Purpose: Sets the terms for a self-employed contractor performing work, distinct from an employee.
Key elements: Deliverables, payment terms, IP ownership, confirmation of contractor (not employee) status.
Example: A startup engages a freelance developer to build a specific feature.

Non-compete agreement

Purpose: Restricts a person from working for or starting a competing business for a set period after leaving.
Key elements: Geographic scope, duration, definition of "competing" activity.
Example: A senior sales rep agrees not to join a direct competitor for 12 months after resignation.

Contracts for buying and selling

Sales contract

Purpose: Governs the sale of goods or services.
Key elements: Description of goods/services, price, delivery terms.
Example: A retailer orders a bulk shipment of clothing from a manufacturer.

Supply agreement

Purpose: Details the terms for a supplier to provide goods to a purchaser on an ongoing basis.
Key elements: Delivery schedule, pricing, quality standards.
Example: A restaurant agrees to regularly buy produce from a local farm.

Distribution agreement

Purpose: Authorizes a distributor to sell or supply a manufacturer's products in a defined market.
Key elements: Territory, exclusivity, minimum order volumes, pricing.
Example: A skincare brand appoints a regional distributor to handle retail sales in a new country.

Vendor agreement

Purpose: Sets terms for an ongoing business relationship with a supplier of goods or services.
Key elements: Service levels, payment terms, renewal conditions.
Example: A retail chain contracts a vendor to restock shelving fixtures each quarter.

Bill of sale

Purpose: Confirms the transfer of ownership of a specific asset.
Key elements: Description of the item, purchase price, warranty information.
Example: A company sells a used company vehicle to an employee.

Contracts for partnerships and investment

Partnership agreement

Purpose: Outlines the terms of a partnership between two or more entities.
Key elements: Profit sharing, management duties, dispute resolution.
Example: Two entrepreneurs form a partnership to start a café.

Joint venture agreement

Purpose: Establishes terms for a business venture between two or more parties who remain separate entities.
Key elements: Contribution of resources, profit sharing, management structure.
Example: Two tech companies collaborate to develop and co-own a new product.

Shareholder agreement

Purpose: Sets the rights and responsibilities of a company's shareholders.
Key elements: Voting rights, dividend policies, buy-sell provisions.
Example: The founders of a startup formalize each shareholder's rights and exit terms.

Subscription agreement

Purpose: Governs the terms for an investor to buy shares in a company.
Key elements: Investment amount, company valuation, investor qualifications.
Example: An investor purchases equity in a growing business.

Memorandum of understanding (MoU)

Purpose: A non-binding agreement expressing intent to cooperate before a formal contract is drafted.
Key elements: Purpose of the agreement, roles of each party, intended outcomes.
Example: Two companies agree to explore a potential merger before signing anything binding.

Contracts for protecting information and property

Non-disclosure agreement (NDA)

Purpose: Protects confidential information shared between parties.
Key elements: Definition of confidential information, obligations, duration.
Example: A startup shares its business plan with potential investors.

Confidentiality agreement

Purpose: Similar to an NDA, keeps shared information private, often used internally.
Key elements: Definition of confidential information, obligations, exclusions.
Example: Employees sign one to protect sensitive company data.

Licensing agreement

Purpose: Allows one party to use another's intellectual property under agreed terms.
Key elements: Scope of use, royalties, limitations.
Example: A software company licenses its product to a corporate client.

Franchise agreement

Purpose: Sets the terms for one party to operate a franchise of a larger brand.
Key elements: Brand guidelines, royalty payments, territorial rights.
Example: An entrepreneur opens a franchise location of a fast-food chain.

Contracts for services, risk, and change

Lease agreement

Purpose: Details the terms for renting property or equipment.
Key elements: Lease duration, payment terms, maintenance responsibilities.
Example: A business rents office space in a commercial building.

Loan agreement

Purpose: Outlines the terms of a loan.
Key elements: Loan amount, interest rate, repayment schedule.
Example: A small business takes out a loan to buy equipment.

Indemnity agreement

Purpose: Protects one party against losses or damages caused by the other.
Key elements: Indemnification terms, liability limits.
Example: A construction firm agrees to cover damages caused during a job.

Performance contract

Purpose: Details the terms for performance-based work.
Key elements: Performance standards, compensation, deadlines.
Example: A musician agrees to perform at a corporate event.

Referral or commission agreement

Purpose: Pays a party a fee or commission for referring new business.
Key elements: Commission rate, qualifying criteria, payment trigger.
Example: A consultant pays a 10% referral fee to anyone who sends them a new client.

Termination agreement

Purpose: Outlines the terms for ending an existing contract early.
Key elements: Termination conditions, notice requirements, final settlements.
Example: A company ends a distribution agreement with a supplier ahead of schedule.

Which contract do you need?

Use this as a quick gut-check, not a legal ruling:

Hiring someone? Employment contract if they're a staff member, independent contractor agreement if they're not.
Paying a fixed project fee for defined work? Fixed-price contract, likely structured as a service agreement or sales contract.
Paying for open-ended or unpredictable work? Time-and-materials or cost-plus contract.
Protecting shared information? NDA or confidentiality agreement.
Formalizing a one-sided promise, like a bonus or reward? That's a unilateral contract, covered in full above.
Two businesses teaming up on a single project without merging? Joint venture agreement.
Renting space or gear? Lease agreement.
Changing terms in an existing contract? That's not a new contract type at all. Check whether you need an amendment or an addendum.

If none of these quite fit, start from how to write a contract, which walks through a section-by-section skeleton you can adapt to almost any situation.

Why contract literacy matters

Knowing your contract types pays off directly: it lets you negotiate better terms, spot the wrong document before you sign it, and manage risk with your eyes open. A business that understands the difference between a fixed-price deal and a cost-plus one, for example, knows exactly who's exposed if a project runs long.

Clear contracts also build trust. When you can explain your terms plainly to a client, supplier, or new hire, you signal that you run things properly, which pays off in fewer disputes and stronger long-term relationships.

FAQs

What's the difference between a unilateral and bilateral contract?

A bilateral contract involves both parties exchanging mutual promises, like a sales contract where one side promises to pay and the other promises to deliver. A unilateral contract is a one-sided promise that's only accepted through performance, like a reward offer.

Do all contracts need to be in writing to be legally binding?

No. Verbal and implied contracts can be legally binding in many jurisdictions, but they're much harder to prove and enforce. For anything involving real money, ongoing obligations, or risk, put it in writing and get it signed.

What's the most common type of business contract?

The service agreement and sales contract are the most common business contracts, since nearly every business either sells something or buys something on defined terms. Both are typically bilateral and can be structured with any of the four pricing models.

What's the difference between a fixed-price and a cost-plus contract?

A fixed-price contract sets one agreed total regardless of what the work costs to deliver, putting cost risk on the seller. A cost-plus contract reimburses the seller's actual costs plus a fee, putting cost risk on the buyer instead.

Can one contract combine elements of multiple contract types?

Yes. A single agreement is often bilateral, priced as fixed-price or T&M, and serves a specific purpose like a service agreement, all at once. The three classification systems in this guide aren't mutually exclusive: they describe different aspects of the same document.

How do I choose the right contract template for my business?

Start with the contract's purpose (what it's for), then decide its pricing structure (how payment works) if money changes hands, and confirm both parties will exchange mutual promises (bilateral) or if one side is offering a one-sided deal (unilateral). From there, pick the matching template above and customize it to your situation.

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