5 Business Contracts Every Family-Owned Company Should Review in 2026

Published: January 9, 2026 | Category: Contract Law

Contracts are the foundation of every business relationship—with vendors, customers, employees, partners, and landlords. But too often, business owners sign agreements without fully understanding their implications, only to discover problematic terms when a dispute arises.

As we enter 2026, now is the perfect time to conduct a comprehensive contract review. Here are five critical business contracts every family-owned company should examine this year.

1. Operating Agreement or Partnership Agreement

What it is: Your company’s governing document that defines ownership percentages, management structure, decision-making authority, profit distribution, and exit procedures.

Why review it now:

• Business circumstances change—ownership, roles, revenue, and goals evolve over time
• Outdated agreements can lead to disputes when major decisions need to be made
• Buy-sell provisions may no longer reflect fair market value or current business conditions
• Family dynamics shift—marriages, divorces, births, and deaths impact ownership interests

Red flags to watch for:

• Vague decision-making procedures (What happens if partners disagree?)
• No buy-sell provisions or outdated valuation methods
• Unclear succession plans
• Missing dispute resolution procedures
• No provisions for admitting new members or removing existing ones

Action step: Schedule an annual operating agreement review with your attorney to ensure it reflects your current business structure and goals.

2. Vendor and Supplier Agreements

What they are: Contracts with the companies that provide goods or services essential to your operations—raw materials, equipment, software, professional services, etc.

Why review them now:

• Pricing terms may no longer be competitive in today’s market
• Automatic renewal clauses could lock you into unfavorable terms
• Liability and indemnification provisions may expose your business to unnecessary risk
• Payment terms and late fees may be negotiable

Key provisions to examine:

• Termination clauses: Can you exit the agreement without penalty? What notice is required?
• Liability limitations: Who is responsible if something goes wrong?
• Indemnification: Are you agreeing to cover the vendor’s legal costs in a dispute?
• Price escalation clauses: Can the vendor increase prices unilaterally?
• Force majeure: What happens if supply chain disruptions occur?
• Quality standards and warranties: Are products guaranteed to meet specifications?

Action step: Create a vendor contract spreadsheet listing all active agreements, renewal dates, and key terms. Flag contracts that need renegotiation or termination.

3. Customer Contracts and Service Agreements

What they are: Agreements that define the terms under which you provide products or services to your customers—including payment terms, warranties, limitations of liability, and dispute resolution procedures.

Why review them now:

• Your service offerings may have evolved since the contracts were drafted
• Payment terms may not align with your cash flow needs
• Liability provisions may not adequately protect your business
• Dispute resolution clauses may force you into expensive litigation

Essential provisions to include:

• Scope of work: Clearly define what you’re providing (and what you’re not)
• Payment terms: When payment is due, late fees, and remedies for non-payment
• Limitation of liability: Cap your exposure to damages
• Warranty disclaimers: Clarify what is and isn’t guaranteed
• Termination rights: Protect your ability to end relationships with problem clients
• Intellectual property ownership: Specify who owns work product
• Confidentiality provisions: Protect sensitive business information

Action step: Have your attorney review your standard customer contracts to ensure they protect your interests and comply with current Illinois law.

4. Employment Agreements and Offer Letters

What they are: Contracts with your employees that define compensation, benefits, job duties, termination procedures, non-compete clauses, and confidentiality obligations.

Why review them now:

• Employment laws evolve—Illinois has specific requirements for non-compete agreements
• Remote work arrangements may require updated terms
• Intellectual property provisions may not adequately protect your business assets
• Termination procedures may expose you to wrongful termination claims

Critical provisions to include:

• At-will employment status: Clarify that employment can be terminated at any time (unless you have cause-based agreements)
• Confidentiality and non-disclosure: Protect trade secrets and proprietary information
• Non-compete and non-solicitation: Restrict employees from competing or poaching clients (must comply with Illinois law)
• Intellectual property assignment: Ensure the company owns work created by employees
• Arbitration clauses: Require disputes to be resolved through arbitration, not litigation

Illinois-specific considerations:

Illinois law restricts non-compete agreements—they’re only enforceable for employees earning more than $75,000 annually (adjusted for inflation). Non-compete agreements must also be provided at least 14 days before employment begins.

Action step: Review all employment agreements, offer letters, and employee handbooks with an attorney to ensure compliance with Illinois employment law.

5. Commercial Lease Agreements

What they are: Contracts that govern your use of commercial real estate—office space, retail locations, warehouses, or industrial facilities.

Why review them now:

• Lease renewals may be approaching—negotiate better terms before auto-renewal kicks in
• Your space needs may have changed (too large, too small, or requiring renovations)
• Rent escalation clauses may be driving up occupancy costs
• Maintenance and repair responsibilities may not be clearly defined

Key lease provisions to examine:

• Rent and operating expenses: Base rent, common area maintenance (CAM) fees, real estate taxes, and insurance
• Rent escalation: How much and how often can rent increase?
• Lease term and renewal options: Do you have the option to extend at a fixed rate?
• Maintenance and repair obligations: Who pays for HVAC repairs, roof leaks, and structural issues?
• Assignment and subletting: Can you sublease if you need to downsize?
• Early termination clauses: Can you exit the lease if business circumstances change?
• Use restrictions: Are you limited in how you can use the space?

Action step: If your lease is up for renewal in the next 12-24 months, start negotiations early to secure favorable terms or explore alternative locations.

Don’t Wait for a Dispute to Review Your Contracts

Too many business owners only scrutinize their contracts when something goes wrong. By then, it’s often too late to fix problematic terms.

A proactive contract review can:

• Identify and eliminate unfavorable terms
• Strengthen your negotiating position with vendors and customers
• Reduce legal risks and potential disputes
• Ensure compliance with evolving laws and regulations
• Save money by renegotiating pricing and payment terms

At Burhanuddin Law, we help Chicago-area family businesses review, negotiate, and draft contracts that protect their interests and support their growth. Whether you need a comprehensive contract audit or help negotiating a specific agreement, we’re here to help.

Ready to review your contracts? Call (312) 216-5174 or email [email protected] to schedule your consultation.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your business situation, please consult with an attorney.