Examples of contractual agreements you’ll run into most often include employment contracts, non-disclosure agreements, independent contractor agreements, residential leases, home purchase agreements, bills of sale, and the click-wrap terms you accept online. Each follows the same underlying rules but carries its own clauses, protections, and traps. Knowing what a given contract typically covers helps you spot what to negotiate and what the law already handles for you.
The Ingredients Every Contract Needs
Before any example makes sense, it helps to know what turns an agreement into something a court will actually enforce. Four pieces have to be present.
First, mutual assent: one side offers specific terms, the other accepts them, and both understand what they’re committing to. Confusion about something fundamental, like price or what’s being exchanged, can mean no real agreement existed. Second, consideration: each side has to give up something of value, whether money, services, or a promise. A one-sided promise with nothing flowing back usually looks like a gift, and courts don’t enforce gifts. One exception is promissory estoppel, where a court may enforce a promise if someone reasonably relied on it to their detriment.
Third, capacity: both parties need the legal ability to contract. In most states anyone under 18 can walk away from a contract they signed, and the same goes for someone who lacked the mental capacity to understand it. Fourth, legality: an agreement to do something illegal, like a price-fixing arrangement between competitors, is unenforceable no matter how carefully it’s drafted.
Employment and Work Contracts
The workplace generates some of the most common contracts people sign. They set pay, protect sensitive information, and draw lines around what you can do during and after the job.
Employment Agreements
A standard employment agreement spells out job title, salary or wage structure, benefits, and the conditions for ending the relationship. Termination clauses matter more than people realize. They typically specify how much notice either side must give and list grounds for immediate dismissal. Without clear termination terms, disputes about whether a firing was legitimate become much harder to resolve.
Non-Disclosure Agreements
NDAs protect trade secrets and proprietary information. A good one identifies what counts as confidential, sets a time period for the obligation, and describes what happens if the signer shares protected information. On the federal level, the Defend Trade Secrets Act lets companies sue in federal court when someone misappropriates a trade secret connected to interstate commerce.1Office of the Law Revision Counsel. 18 USC 1836 – Civil Proceedings Many NDAs include a pre-set dollar amount the signer agrees to pay for a breach, which saves the company from having to prove actual losses.
Independent Contractor Agreements
When a business hires a contractor rather than an employee, the contract needs to make that distinction stick. The IRS looks at whether the hiring party controls only the end result or also controls how and when the work gets done. If the business dictates methods, schedules, and tools, the worker is likely an employee regardless of what the contract says.2Internal Revenue Service. Independent Contractor Defined A well-drafted contractor agreement specifies that the worker controls their own methods, handles their own taxes, and receives payment reported on a 1099 rather than a W-2.
Who Owns the Work Product
Contractor agreements also need to address ownership of what gets created, because federal copyright law treats employees and contractors differently. Anything an employee creates within the scope of their job automatically belongs to the employer. For contractors, the work qualifies as the hiring party’s only if it falls into one of nine specific categories (such as contributions to a collective work, translations, or instructional texts) and both sides sign a written agreement designating it as a “work made for hire.”3Office of the Law Revision Counsel. 17 USC 101 – Definitions If the work doesn’t fit, the contractor keeps the copyright unless they separately assign it in writing. A business that pays for custom software, for instance, may not own the code unless the contract explicitly transfers the rights.
Non-Compete Clauses
Non-competes restrict a worker from joining a competitor or starting a competing business for a set period after leaving. Enforceability varies dramatically by state. A handful of states ban non-competes outright in the employment context, and most others impose restrictions such as income thresholds or limits on duration and geographic scope. Courts in less restrictive states generally require the terms to be reasonable.
The FTC finalized a rule in April 2024 that would have banned most non-competes nationally, but a federal district court blocked it that August, and it remains unenforceable.4Federal Trade Commission. FTC Announces Rule Banning Noncompetes For now, non-compete law is a state-by-state patchwork, so the enforceability of any clause depends on where you work.
Real Estate Contracts
Real estate agreements are among the most heavily regulated contracts you’ll encounter. Nearly every state requires them to be in writing under the Statute of Frauds. An oral agreement to buy property or rent a space for more than a year is typically unenforceable.
Residential Leases
A residential lease identifies the property, sets the rental period, and locks in the rent amount and payment schedule. It also covers maintenance responsibilities, late-payment penalties, and rules on things like pets or subletting. Security deposits usually run one to two months’ rent, though the exact cap depends on your state’s landlord-tenant statute. Pay close attention to early termination provisions, because breaking a lease without a valid reason can leave you responsible for the remaining rent.
Purchase and Sale Agreements
When you buy a home or a piece of land, the purchase and sale agreement controls the transaction. It includes the sale price, down payment, financing terms, and a closing date. What sets these contracts apart is the heavy use of contingencies: conditions that let the buyer back out without penalty. The most common cover home inspections, appraisals that come in below the purchase price, and the buyer’s ability to secure financing.
Earnest money reinforces the deal. The buyer puts down a deposit, often held in escrow, to show the seller they’re serious. If the buyer walks for a reason not covered by a contingency, the seller typically keeps the deposit. If the deal collapses because of a valid contingency, like a failed inspection, the money comes back to the buyer. The amount is negotiable but generally runs 1% to 3% of the purchase price.
Consumer and Online Contracts
Consumer contracts cover everything from buying a used couch to downloading an app. Some are formal documents you negotiate; others are walls of text you scroll past. Both carry legal weight.
Bills of Sale
A bill of sale is the simplest consumer contract. It records the transfer of personal property from one person to another, identifying the item, the price, and the date. For sales of movable goods like vehicles, furniture, or electronics, Article 2 of the Uniform Commercial Code provides the framework most states have adopted.5Legal Information Institute. UCC 2-105 – Definitions: Transferability, Goods, Future Goods, Lot, Commercial Unit Many private-party sales include an “as-is” clause, meaning the buyer accepts the item in its current condition with no guarantees. That clause is exactly why you inspect anything expensive before paying.
Click-Wrap Agreements
Every time you click “I Agree” on a website or app, you enter a contract. These click-wrap agreements bind you to the platform’s terms of service, privacy policy, and often an arbitration clause. Courts regularly uphold them, provided the terms were reasonably visible and you had to take a clear action to accept. The distinction worth knowing is between click-wrap, where you actively check a box or click a button, and browse-wrap, where a company argues you agreed just by using the site. Browse-wrap stands on much shakier legal ground because there’s no clear moment of consent.
Door-to-Door Sales and the Cooling-Off Rule
For certain in-person sales, you have a federally guaranteed escape hatch. The FTC’s Cooling-Off Rule gives you three business days to cancel a sale made at your home, your workplace, or a seller’s temporary location like a hotel or convention center.6Federal Trade Commission. Buyer’s Remorse: The FTC’s Cooling-Off Rule May Help Saturday counts as a business day; Sundays and federal holidays do not. The rule doesn’t cover sales under $25 at your home or under $130 at temporary locations, and it excludes online, mail, and phone purchases entirely. To cancel, sign and date a cancellation notice and get it postmarked before midnight of the third business day. Once you cancel, the seller has 10 days to refund your money.
Clauses to Watch For
Some clauses show up across almost every category of contract and quietly reshape your rights. These are worth reading before signing anything.
Electronic Signatures
Paper signatures aren’t required for most contracts anymore. Federal law establishes that a signature or contract cannot be denied legal effect just because it’s electronic.7Office of the Law Revision Counsel. 15 USC 7001 – General Rule of Validity That principle comes from the E-SIGN Act of 2000, which covers transactions in interstate commerce. At the state level, 49 states have adopted the Uniform Electronic Transactions Act. New York is the lone holdout but has its own statute recognizing electronic signatures. For an e-signature to hold up, the signer must have intended to sign, both sides must have agreed to conduct business electronically, and the system must keep an accessible record. Platforms like DocuSign and Adobe Sign are built to satisfy these requirements.
Arbitration Clauses
Many contracts, especially employment agreements and consumer terms of service, require disputes to go to private arbitration instead of court. The Federal Arbitration Act makes these clauses enforceable in any contract involving interstate commerce.8Office of the Law Revision Counsel. 9 USC 2 – Validity, Irrevocability, and Enforcement of Agreements to Arbitrate An arbitrator’s decision is final and binding, and courts rarely overturn it. Arbitration proceedings are private, so outcomes don’t set precedents, and many clauses include class-action waivers that prevent you from joining with others who have the same complaint. Courts have consistently upheld those waivers.
One federal carve-out matters. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, signed in 2022, lets a person alleging sexual harassment or sexual assault take their case to court even if they previously agreed to arbitration.9Congress.gov. HR 4445 – Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 That choice belongs to the person bringing the claim, not the employer.
Force Majeure Clauses
Force majeure clauses excuse performance when an extraordinary event makes it impossible. Common triggers include natural disasters, wars, pandemics, and labor strikes. The clause doesn’t kick in just because performance became expensive or inconvenient; an economic downturn rarely qualifies because it’s considered a foreseeable business risk. Courts interpret these clauses narrowly, and some jurisdictions require the specific type of event to be listed. If your contract says “natural disaster” but not “pandemic,” whether COVID-19 counts depends on the court. If you’re negotiating a contract, read the force majeure list carefully and make sure it names the scenarios that could realistically disrupt performance.
What Happens When Someone Breaks a Contract
When one side fails to hold up their end, the other has several possible remedies. The right fit depends on the type of contract and the nature of the breach.
Monetary Damages
The most common remedy is money. Compensatory damages aim to put you in the financial position you’d have been in if the contract had been performed. If a contractor walks off your renovation halfway through, compensatory damages cover the cost of hiring someone else to finish minus whatever you saved by not paying the original contractor. Consequential damages cover indirect losses that flow from the breach, like lost business revenue because your storefront renovation wasn’t finished on time. These are recoverable only if the losses were foreseeable when the contract was signed. Some contracts include liquidated damages clauses that set the penalty in advance; courts enforce them as long as the amount is a reasonable estimate of anticipated harm rather than a punishment.
Equitable Remedies
When money can’t fix the problem, a court may order specific performance, meaning the breaching party must do exactly what they promised. This remedy is mostly reserved for unique property, like real estate or rare collectibles, where no amount of money would let you buy an equivalent. Courts can also issue injunctions ordering someone to stop doing something, such as violating a non-compete clause.
The Duty to Mitigate
If the other side breaches, you can’t just sit back and let your losses pile up. You have a legal obligation to take reasonable steps to minimize the damage. A landlord whose tenant breaks a lease, for example, needs to make reasonable efforts to find a new tenant rather than simply suing for the full remaining rent. Failing to mitigate can reduce or eliminate the damages you’re entitled to recover.
How Long You Have to Sue
Every breach of contract claim has a deadline. The statute of limitations for written contracts varies widely by state, from as short as 3 years to as long as 15 or even 20 in certain circumstances. Most states fall in the 4-to-6-year range. Oral contracts typically have shorter deadlines. Once the statute of limitations expires, you lose the right to sue regardless of how clear-cut the breach was. If you think someone has broken a contract with you, figuring out your state’s deadline is one of the first calls to make.