What is a Terms of Business Agreement

A terms of business agreement or a TOBA is a formal document which gives detailed description of the various terms, rules and regulations to be followed by the parties who are signing the contract. An agreement is a legal document signed between two or more parties where they agree to do something, be is sale, purchase, rent, trade or any matter, and for that they need to formally lay down the terms so that there is no conflict or confusion later. The terms are usually discussed in the beginning between the parties and then they are put on paper where the concerned individuals or representatives of companies sign, thereby formally agreeing to the terms of the business. These terms are legally binding and can be used in court proceedings.
There are a few points to be kept in mind when framing a TOBA:

  • The agreement should give the names and other contact details of the parties signing the document clearly
  • It should have a glossary or a section in the beginning of the document which defines all the technical terms or business terms correctly to prevent any misinterpretation
  • The business terms can also be divided into different sections depending on what kind of business it is; for example, there can be general terms, payment terms, termination rules, renewal terms and so on
  • Some terms may also refer to confidentiality rules as part of intellectual property protection and it must also have a section which mentions what to do in case any party has a complaint
  • The agreement must lay down in a detailed manner the business relationship between the people or companies involved and lays down their responsibilities in relation to the services offered or the business deal.
  • Once all the terms are discussed and read by the concerned parties, they shall sign it and make the TOBA legal.

Category: Sample Agreements

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