People ask me all the time, what are the essential contracts that I need for my business. Here's my list:
Pre-Nuptial Agreement Between Founders:
If your business has multiple founders, you simply must have a Buy Sell Agreement if you are a corporation or a Member Operating Agreement if you are an Limited Liability Company or a partnership. Whatever its title, this agreement is the company equivalent of a pre-nuptial agreement that explains how the owners will separate if they reach irreconcilable differences in running the company, and if they die or become unable to work in the business. This agreement should be entered into when you form the company or very shortly thereafter.
Independent Contractor Agreement:
Most new businesses hire independent contractors. Here, you must use an Independent Contractor Agreement to help avoid de-facto employee status risks and to ensure that the company owns the intellectual property the independent contractors produce and delivery.
Employment Agreements are also a best practice, and have your new hires sign these as a condition of employment, meaning before their first day of work. In the Employment Agreement, you can address important issues like confidentiality, non-completion, non-solicitation, and other critical issues unique to your business.
Non-Disclosure Agreements are also a must have. A good Non-Disclosure Agreement will allow you to discuss your confidential business information and plans with non-employees and restrict these people from disclosing and using this valuable information for their own personal gain. Often, the Non-Disclosure Agreement will include non-competition language.
Sales or Services Agreement:
If you are selling goods or services, or if you are licensing your software, you must have a Sales or Services Agreement that you use with your customers. This agreement will define the scope of work, acceptance and payment terms, and this can help you avoid costly disputes. In addition, the Sales or Services Agreement will allocate and limit risks of performance.
Copyright 2006 | Mark D. Walters
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