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Any small business needs to make sure they are using the correct contracts. Indeed, this is especially true for a catering business. Whether dealing with customers or using suppliers, having a legal document that binds both parties will ensure your agreements are legally enforceable. This article will outline the five essential contracts your catering business should use.

Hire Purchase Agreement

Your catering business will likely need heavy-duty cooking appliances. Instead of paying a significant sum of money, you may consider using a hire purchase agreement. This is an agreement where you pay a deposit on the equipment and then pay the rest back in periodic instalments. Many businesses utilise this method to avoid spending significant capital costs at the start of a business’ life.

The hire purchase contract will outline the terms of the agreement. It may includes clauses such as:

  • what the downpayment is;
  • how much the instalments are;
  • how often the instalments are; and
  • how to terminate the agreement.

Having a contract is essential because it is legally enforceable. This means your contracting party cannot change the terms of the agreement without your consent. In the case of a hire purchase contract, it means the company you bought your appliance from cannot increase the interest payment or change how often your payments are. 

Client Agreement

Getting clients is the most crucial part of your catering business. However, a client contract must underpin any agreement you have with a client. A client contract will outline the terms of your relationship, outlining each party’s obligations and duties. You can usually use the same general contract for different customers depending on what you are providing. The most critical clause that your client agreement should contain is the cost of the service. This is so your customer has a legal obligation to pay for that service if they sign the agreement. 

Supply Agreement

As a catering business, you will have to deal with suppliers. Depending on how your business runs, you may have a continuous agreement or a situation where suppliers provide you with goods as you them. Either way, these agreements should be outlined by a supply contract. 

In some cases, your supplier will have a contract. However, you must modify the terms to suit your needs. Some of the terms your supply agreement may include are:

  • dates the supplier will supply goods;
  • payment methods; and
  • the length of supply term.

These terms are not comprehensive, but they are important. 

Loan Agreement

There may be times during your business where you may need to get a loan from the bank. You may be going through a tough season or want to buy a piece of equipment. The loan agreement will outline the terms of the loan. Indeed, you will need to understand and appreciate all the terms of the loan, and this will be vital to the survival of your business.

A loan agreement is essential because it means the bank cannot alter the terms without your consent. It also means the bank could take your company assets if you do not pay your loan back. Your loan agreement will outline:

  • the length of the loan;
  • interest payments; and
  • default consequences.

Partnership Agreement

There may be a time where you want to bring in another partner to help run your business. They will be able to bring their expertise and provide a capital injection. If you are bringing in a new partner, then you must have a solid partnership agreement. 

The partnership agreement will showcase the shareholding between each partner and how the profits are distributed. It will also outline the plan when the business is dissolved. Having a formal partnership agreement will help resolve any dispute because it will show who has the decision making power.

Key Takeaways

Using the proper contracts for your business is crucial for its success. A catering business needs to ensure the agreements they enter into are enforceable by law. If your contracting party breaches the contract, the court may be able to enforce the contract. The court may also enforce monetary damages equal to the harm incurred by the breach of contract. 

If you need any legal assistance with contracts, LegalVision’s experienced contract lawyers can help. Call us today on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Am I the owner of the equipment during a hire purchase agreement?

Yes, you still own the equipment, but if you do not pay your instalments, the equipment can be taken away from you.

What happens if I breach the contract?

Then your contracting party can take you to court to seek a remedy such as damages or specific performance.

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