As a business owner, one of the things that you would have to take is risks. However, taking risks does not necessarily mean jumping at every opportunity offered before you. Since you also have a responsibility to your employees as well as to your investors, you would need to make sure that you also protect yourself whenever you enter into an agreement. This is where knowledge about the different kinds of contracts would come in handy.
All contracts, regardless of their type, are bound by the various laws on contracts within your area. Oftentimes, contracts are classified based on the type of payment indicated in it. Some of the most common types of contracts based on this classification would include fixed rice or lump sum contract, unit rate contract, reimbursable contract, and financing contract, among others. Of these, it is the fixed price contract that is most often used.
The fixed price of lump sum contract can be used for both long term and short term engagements. This type of contract clearly indicates how much the cost is for fulfilling the whole contract or for supply of service or product. This type of contract is preferred by most people since it provides a degree of certainty for both parties.
On the other hand, contracts lawyer Denver has make use of the unit rate contracts whenever the business owner would have to work on and get paid based on a specific number or volume of work. Oftentimes, this kind of contract is used for long term engagement where it is not possible for the one party to indicate a specific number of jobs that need to be done.
Whenever one of the parties cannot give a specific date when the project or the work to be done would end and how much it would cost, a Colorado business lawyer would usually prepare a reimbursable contract type. In this contract, the client party has to make an upfront payment to the service provider. Renegotiations for the payment usually take place when the contract already comes to an end.
Lastly, a contracts lawyer Colorado has usually make use of the financing contract when one of the parties need to raise debt and equity during the duration of the project. This type of contract is commonly used in industries involving mining, transportation, building, oil and gas, and infrastructure projects.