Contracts… Let’s be honest, most entrepreneurs would far prefer to spend time on something different. Contracts always seem to get in the way of getting on with daily business.
However, it really is incredibly important to spend time in advance, on the preparation of contracts. This will allow you to frame the rules of your engagement in your favour, without ambiguity, and will prevent a fall out at a later stage as parties to an agreement have a very clear idea of what is required of them.
Below are 6 very important contracts that all businesses should have in place from the start…
1. Terms and Conditions
No matter what kind of business you run, every entrepreneur will need to pull together a set of Terms and Conditions.
These are your rules, your way of doing business. You determine how you provide your products/services, from quotation all the way to termination, being strict but fair, and providing a clear idea between you and your customers of how you conduct business, what you charge, price increases, delivery times, limitations of liability and the like.
Good Terms and Conditions shorten discussions between you and your potential clients and prevent disputes. If a dispute does arise concerning a subject which is clearly recorded in your Terms and Conditions, the dispute should be stopped dead in its tracks, as the subject and its contents have been recorded and agreed to in black and white.
2. NDA or Non-Disclosure Agreement
Before you set out with your epic world changing product / service, you naturally want to be able to talk to your customers, partners or suppliers in confidence, without fear of your confidential information being used by them, without your permission.
The legal instrument to help enforce and protect this is known as a Non-Disclosure Agreement (or NDA for short), and prevents confidential details of your conversation being used or leaked, or from parties being able to approach directly any other persons which have been introduced by the parties to each other in confidence.
4. Employment Agreements
Congratulations, you have employed staff! Of course you trust them completely, and hope that nothing will ever go wrong.
This is always the thought process at the beginning of the hire, but setting clear expectations of salary, leave, duties, notice periods and the like is crucially important
5. Copyright Assignments
In the lifespan of your business you will most likely outsource hundreds of tasks to independent parties and freelancers. These might entail for example, software development, blog content, logo creations and the like.
Outsourcing tasks of your business to external people not employed by you has one main unintended consequence, although you pay the outside party for work done, you do not own the work that they create, as these are all owned by the person who authored them, being the external party.
A Copyright Assignment Agreement is the correct legal document to transfer the above ownership to you.
A valid assignment of copyright must be in writing and signed by, or on behalf of, the external party.
6. Independent Contract Agreement
In today’s interconnected world, where freelancers are available from all corners of the globe, bringing together expertise on a vast array of topics has never been easier. In this regard, you will in the lifetime of your company, engage with external services providers that you do not employ. These relationships are normally regulated by an Independent Contractor Agreement.
An independent contractor is different to an employee in that you employ an employee (to state the obvious) and have control over their day to day services, but only engage, an Independent contractor when and if you need them and don’t have much control over their day to day service renderings.
It is important to regulate the relationship between you and your independent contractor by recording obligations, expectations, time for delivery, payment guidelines, intellectual property ownership and the like.