From the rules that govern your cell phone service to gym membership, contracts have become so commonplace that most of us barely read them.
This should not be the case with contracts executed on behalf of your business; problems with contracts are one of the leading reasons small business owners end up in court. Reviewing each one carefully, in a distraction-free zone and ideally with your legal counsel, should be part of your management practice.
The following are the most vital contracts for small business owners. How many are in effect for your business?
- Operating Agreement. Do you have a business partner? Life happens. Have options when things go wrong: a partner dies,
the business fails, the partners come to an impasse, etc. Creating contingency plans now can save headache and heartache later.
- Independent Contractor Agreements. This contract can protect your company’s confidential information, customer data and intellectual property from independent contractors who decide to end the relationship.
- Employee Handbooks. Your employees aren’t likely to include these in their summer reading list. No, they pick it up if they think there’s a problem. Employee handbooks have been found to include implied contractual terms that could undermine the presumption of “at-will” employment; as an employer, you must be as careful as possible to not ignore the documents you’ve put in place with employees. But the handbook can’t be a one-size fits all solution. This is definitely not the time to DIY! Your business has unique dynamics and different problems and your handbook needs to be tailored to those demands and problems, otherwise you may carry unwanted legal exposure. Ensure that your employee handbook is legally compliant and fully tailored to the unique needs of your business.
And finally, don’t zone out on the final fine print. Every contract contains “boilerplate” terms that usually appear at the end of the agreement. Never underestimate boilerplate provisions, and always check them carefully. Boilerplate provisions usually include:
- Rules on how the agreement will be interpreted
- What law will govern the subject matter of the contract
- Whether the business contract can be assigned
- What happens to the entire agreement if its provisions are found to be invalid by a court
- Whether third parties are deemed to be third-party beneficiaries of the agreement
Remember that every clause in a contract may be negotiated – even the boilerplate provisions. Contact us today to discuss your small business’s goals and how we can support you. We can’t wait to join your team!