Which Legal Agreements Should Businesses Have?

Agreements Concept. Word on Blue Folder Register of Card Index. Closeup View. Blurred Illustration. 3D Rendering.

Most businesses maintain basic agreements that are instrumental in conducting day to day business and avoiding future legal disputes. Below is a summary of agreements that every business should consider entering into when initiating a business.

Entity Agreements. Whether you are forming a corporation, limited liability company or partnership, you need an agreement that establishes your entity. A shareholder, operating, or partnership agreement outlines the responsibilities of the business associates and designates the ownership interests of each party. These agreements also mandate procedures for conflict resolution, death or incapacity of a partner or member, and dissolution of the entity.

Sales or Service Contracts. Sales and service agreements describe the products and services that the business will provide to customers. For a service-based business, this contract sets forth the terms of the services that the company offers to the customer, and for a business that sells products, the contract identifies the terms of the sale, including payment, delivery and warranties.

Employment Agreements. A contract of employment that specifies the terms of employment including salary, wages, and benefits helps to prevent disputes between employers and employees. Independent contractor may be necessary for businesses that rely on the services of outside vendors, consultants or short-term employees. Businesses should ensure that they draft independent contractor agreements that identify the service provider as an independent entity. When a business misclassifies an independent contractor, it can incur significant penalties and legal ramifications.

Non-Disclosure Agreement. A Non-Disclosure Agreement (NDA) requires employees or workers to maintain confidentiality with respect to specific information. NDAs are relevant in proprietary industries where employers must prevent employees or contractors from sharing trade secrets, client information or proprietary knowledge. Some states also allow businesses to require employees to sign Non-Compete Agreements (NCA). An NCA is designed to prevent an employee from obtaining employment for a specific time and within a specific geographical area. These agreements are not enforceable in California as they are regarded as an excessive restriction on the ability of an individual to freely engage in commercial activity.

Contact Shane Coons at 949-333-0900 or visit his website at www.ShaneCoonsLaw.com to find out more about his practice.

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Which Legal Agreements Should Businesses Have?

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