Last Updated: 04.15.2020
Small business owners often overlook the need for well-structured contracts, as many of their transactions can be accomplished informally. However, having documentation of business transactions is important for protecting your best interests and preserving the legal rights of your business. Below, the ENLawyers have provided information on four important contracts that every small business should employ.
Employment Contracts and Offer Letters
Employee contracts and offer letters clarify the specifications, requirements and details related to a job position, for potential employees. These documents offer the employee an explanation of their responsibilities if they accept the position, and often provide a list of benefits that they will receive in exchange for their work. In many cases, an employment contract will have an outline of the employer or business owner’s responsibilities and obligations to their employees, as well.
When constructing an employment contract or offer letter, it is important to include a confidentiality agreement and clauses pertaining to how and when the contract can be amended or changed. The document should be signed by the prospective employee and the business owner, or a qualified representative of the business.
Having an inclusive employment contract and offer letter can clear up any confusion about employee requirements, responsibilities or compensation. These documents may also help shield a business from liability if a legal dispute arises.
Confidentiality Agreements
Confidentiality and non-disclosure agreements exist to ensure that the information a business discloses to a third party is not shared with others. Such contracts often coincide with employment contracts in an effort to protect trade secrets or private business information. But confidentiality agreements can also be used prior to meetings with new clients and competitors if the information disclosed could be stolen for another party’s use or financial gain.
When structuring a confidentiality or non-disclosure agreement, it is important to explicitly outline the third party’s obligations. This can include specifying what information is public knowledge, how the information disclosed may be used and the duration of the agreement. If a third party violates a confidentiality or non-disclosure agreement, the business will then have the option to seek legal redress.
Leases
Leasing agreements for office or retail space should always be evaluated against the needs of a business, as this contract can have a significant impact on a business in terms of financial commitment.
It is important to make certain that your lease is cohesive with the operations and goals of the business. More often than not, standard leases drafted by a landlord will be biased towards their needs. Leases can, and should, be renegotiated to a point where the business owner and the landlord are comfortable. Particular factors to assess include:
- Type of space
- Permitted uses of the space
- Term of the lease and if it is negotiable
- Tenants’ rights
- Landlord obligations
Purchase Agreements
Small businesses often obtain funding through the sale of stock. Purchase agreements allow these businesses and their investors the opportunity to assess and negotiate the terms of the stock purchase so that they are favorable for all parties involved.
In addition to disclosing how much and what kind of stock is being sold, purchase agreements should detail the rights of the investors, the conditions under which the sale occurs and a list of representations and warranties from both the buyer and seller.
ENLawyers Bottom Line
When drafting any type of business contract, it is important to consult with experienced legal advisors, as these documents serve to represent your business’s legal rights and best interest. At the Law Offices of Eldridge and Crandell, we pride ourselves on the value that we deliver to our small business clients—this includes our Business Document Drafting and Review services.
Recently, our firm launched a digital client intake portal for our prospective business advisory clients. Through these forms, prospective clients are able to provide our attorneys with details regarding their business needs and upload related documentation. This intake portal decreases the time and resources that our clients spend discussing legal matters so that they can focus on what is really important—developing their business.
We have extensive experience drafting and reviewing various types of business contracts and agreements, and can provide your business with the guidance, resources, and tools necessary to achieve success. For more information about business contracts, or to schedule a consultation with one of our business advisors, contact the Law Offices of Eldridge and Crandell.