Small businesses often decide not to have their own contracts drafted. The common reasons we hear are the cost of drafting a contract, the time involved, and not wanting to deal with lawyers. This isn’t an issue while their business relationships are working smoothly, but it does become a problem when things start to go wrong.
The cost of preparing a contract is often a small price to pay compared to the costs when things go wrong, and if things go badly wrong, you’ll be spending far more time resolving the issues, and dealing with lawyers a lot more than if there had been a good contract in place.
Even if someone else has provided you with a contract, it can be well worth spending the money to have a lawyer look over it and advise you on any issues with the contract. Contracts drafted by the other party’s lawyers are generally drafted only with the other party’s interests considered, so they are usually quite one-sided.
A few contracts that you should consider (or consider having looked over) for your business:
- Shareholder agreements. If you have more than one shareholder, you should consider whether the shareholders are protected legally, and what is to happen if and when someone wants to get out of the business, if the business is to be sold, if someone passes away, etc.
- Lease. Particularly for commercial leases, but also for retail leases, you should have a lawyer look over your lease to ensure that you are agreeing to what you think you’re agreeing to, and there are no nasty surprises hidden in the pages of documentation.
- Supply contracts. If you are supplying goods to others as a wholesaler/manufacturer or in any situation other than retail (and sometimes even then), you should ensure that you have a contract that covers what each party expects of the other. If you’re receiving goods from a wholesaler, it’s equally important to ensure that this contract covers you as well as the wholesaler.
- Terms and conditions. You don’t want to be legally liable for something on your website if you could have avoided the whole problem simply by having terms and conditions. You also don’t want people being able to take your hard work and re-use it because of poorly-worded or non-existent terms and conditions.
- Intellectual property contracts. These cover many different aspects of your business – who owns copyright for employee work, licensing other businesses and people to use your copyright materials and trade marks, etc.
- Privacy policy. This should cover both customers and employees, and let them know how you will be dealing with their private data.