Commercial Agreements in Kenya

Commercial Agreements in Kenya

At Silvana & Associates Advocates, we assist clients across all industries in structuring, drafting, and enforcing commercial agreements that align with both legal requirements and strategic objectives. Whether you require a straightforward consultancy agreement or a comprehensive M&A contract, our team ensures that your interests are well-protected.

At Silvana & Associates Advocates, we advise companies, entrepreneurs, and individuals across all sectors with the drafting, review, implementation, and enforcement of commercial contracts. Our goal is to offer practical and effective legal solutions that support your business strategy while ensuring compliance with Kenyan law.

This article provides a comprehensive look at the most common types of commercial agreements in Kenya, what they entail, and why they matter.

1. Licence Agreements

A licence agreement gives one party the right to use another’s intellectual property (IP) such as trademarks, patents, software, or brand assets. It protects the licensor’s rights while allowing the licensee to benefit commercially. These agreements are common in technology, publishing, and branding.

2. Partnership Agreements

When two or more individuals or entities join forces to run a business, a partnership agreement sets out profit-sharing ratios, responsibilities, decision-making processes, and exit terms. It is crucial in avoiding disputes and maintaining transparency.

3. Terms of Business

Also known as standard terms and conditions, these agreements govern how a company provides goods or services. They typically cover pricing, payment, warranties, liability, and dispute resolution. Having clear terms of business ensures fairness and minimizes ambiguity.

4. Franchising Agreements

Franchise agreements allow a franchisee to operate under an established brand’s name and business model. They detail fees, royalties, operational guidelines, marketing contributions, and quality control. This model is increasingly popular in Kenya’s fast-food, retail, and service sectors.

5. Joint Venture Agreements

A joint venture (JV) agreement governs collaboration between two or more businesses for a specific project or long-term venture. It defines capital contributions, management structure, profit-sharing, and dispute resolution mechanisms. JVs are common in infrastructure, real estate, and technology.

6. Advertising and Marketing Agreements

These contracts set out the terms between businesses and marketing agencies. They cover campaign deliverables, timelines, intellectual property rights, fees, and confidentiality. They are vital in protecting brands when outsourcing marketing functions.

7. Agency and Distribution Agreements

An agency agreement appoints an individual or entity to represent a business in transactions, while a distribution agreement allows a distributor to sell a manufacturer’s products. Both clarify rights, territories, commissions, exclusivity, and termination conditions.

8. Confidentiality and Non-Disclosure Agreements (NDAs)

NDAs safeguard sensitive information such as trade secrets, client lists, or product designs. They restrict disclosure and ensure confidentiality during negotiations, collaborations, or employee engagements.

9. Collaboration Agreements

When businesses or individuals work together without forming a new entity, a collaboration agreement outlines contributions, responsibilities, intellectual property rights, and profit-sharing. This is common in creative industries, research, and innovation projects.

10. Consultancy Agreements

Hiring consultants requires a clear consultancy agreement. It defines the scope of work, payment, timelines, confidentiality, and liability. This protects both the client and the consultant.

11. Memoranda of Understanding (MOUs) / Heads of Terms

MOUs set out the initial intentions of parties before entering into binding contracts. While not always enforceable, they provide a roadmap for negotiations and demonstrate good faith.

12. Lease, Hire, and Maintenance Agreements

These regulate the use of property, vehicles, or equipment. They cover rental terms, maintenance obligations, liability for damage, and renewal options. In Kenya, leases over certain periods must be registered for legal validity.

13. Manufacture, Purchase, and Supply Agreements

These contracts govern production and delivery of goods. They cover specifications, pricing, timelines, warranties, and remedies in case of breach. They are crucial in supply chain management.

14. Strategic Alliance Agreements

Strategic alliances allow businesses to cooperate for mutual benefit without merging. Agreements typically address market entry, resource sharing, intellectual property rights, and dispute resolution.

15. Mergers and Acquisitions (M&A) Agreements

M&A agreements facilitate the sale, purchase, or merger of companies. They are detailed documents covering valuation, warranties, indemnities, due diligence, and post-closing obligations.

16. Employment and Independent Contractor Agreements

Employment contracts define the rights and obligations of employers and employees, covering salary, benefits, duties, confidentiality, and termination. Independent contractor agreements, on the other hand, govern relationships with freelancers or service providers, clarifying tax responsibilities and deliverables.

17. Shareholders’ Agreements

For incorporated companies, a shareholders’ agreement regulates ownership rights, voting rights, dividend distribution, and exit provisions. It complements the company’s Articles of Association and protects minority shareholders.

18. Loan and Finance Agreements

These agreements outline terms under which lenders provide financing. They include repayment schedules, interest rates, security, default provisions, and governing law. They are widely used by banks, microfinance institutions, and private lenders.

19. Service Level Agreements (SLAs)

SLAs define the quality, scope, and timelines of services provided. They are common in IT, telecoms, and utilities, ensuring accountability and measurable performance standards.

20. Technology and Software Agreements

Technology agreements cover software licensing, software-as-a-service (SaaS), cloud services, and IT support. They address user rights, data protection, liability, and updates. In Kenya’s growing tech ecosystem, these contracts are increasingly critical.

21. Construction and Engineering Agreements

These agreements govern building and infrastructure projects. They define scope, milestones, payments, risk allocation, warranties, and dispute mechanisms such as arbitration. They are vital for real estate developers and contractors.

22. Outsourcing Agreements

Outsourcing contracts are used when a company delegates functions such as payroll, IT support, or call centre operations to a third party. They set performance standards, confidentiality, and liability.

23. Settlement Agreements

A settlement agreement is used to resolve disputes without going to court. It records agreed terms such as compensation, confidentiality, and waiver of further claims.

24. Investment Agreements

Investment agreements govern equity or debt investments in companies. They cover valuation, investor rights, board representation, and exit options. They are central to venture capital and private equity transactions in Kenya.