“At one time, transacting with business was easy. Two people agreed to make a trade, and both parties honoured their word. But in the 21st century, professionals are all too aware of the long history of deal-breaking and lawsuits that have taken place all around them. In business, contracts are important because they outline expectations for both parties, protect both parties if those expectations aren’t met and lock in the price that will be paid for services.”
The contracts that your business requires will depend very much on the type of business you conduct and the stage it’s at. There are however essential contracts that regardless of the above, every business needs to have place.
Employment Contract is a legally binding agreement between an employer and employee that outlines the terms of employment.
Independent Contractor Agreement is a contract for service and is usually a contract where the contractor undertakes to perform a specific service or task, and upon completion of the agreed service or task, or upon production of the result agreed upon, the contractor will be paid.
Shareholders Agreement it regulates the relationship between the company, its shareholders, and directors and governs how your business will be managed.
Memorandum of Incorporation it sets out the rights, duties and responsibilities of the shareholders, directors and other persons involved in the company.
Product and/or service Agreement/s is an agreements/ under which one party agrees to provide services and/or products to the other party for remuneration.
Non-Disclosure Agreement an NDA prevents unauthorized disclosure of confidential information to a third party and restricts the use of disclosed information to the purpose specified in the NDA. The obligations can be mutual or one-sided depending on whether the disclosure applies to just you or both parties.
Data Protection Policy While your privacy notice is an external document, your data protection policy is an inward-facing document. This policy informs everyone who works for the business on how the business will handle their personal data.
Financial Agreements is a contract between a lender (the financer) and a borrower (the business).
Insurance Agreements is a legal contract between an insurance company and an insured party. This contract allows the risk of a significant financial loss or burden to be transferred from the insured to the insurer.
Equipment and/or Property Agreements is a legal contract for the purposes of concluding either a lease agreement or a sale agreement.
What business risks can arise by NOT having a legally binding contract in place?
“As a result of NOT having written contracts in place your business may be left open to disputes and potential litigation. Not only can these result in unnecessary costs but they also divert crucial resources away from achieving your results.
Where you do not have agreements with your suppliers, there is no legal obligation for them to deliver essential supplies and/or services on time, which could result in you being unable to fill orders. And in the case of Shareholder Agreements, failure to have the former where there is an even number of shareholder votes means you run the risk of a deadlock situation.”
"By failing to prepare, you are preparing to fail." It's better to not have an opportunity and be prepared, than to have an opportunity and not be prepared. – Benjamin Franklin.
Contact Compliance Hub today so you can enjoy the benefits of well-constructed contracts that protect your company’s proprietary interests.
Tiffany Reed: HR, SDF & EE Consultant - Compliance Hub