Some people love them, others don’t, but however you feel about contracts, they are important for businesses of all sizes. Contracts ensure that employees, consumers, and businesses are protected from legal issues and liabilities that can lead to huge expenses and lost reputations. Read on to find out more about what contracts are and when to use them in a small business.
Employment Offer Letters
Unless you have employment offer letters sent to prospective employees, your business is vulnerable to legal entanglements. If you change the terms or conditions of their employment – things such as salary -but you don’t have their agreement, it can lead to losses and damages.
An employment letter will contain the job description, the job offer, the responsibilities of the job, the salaries and benefits, confidentiality, and an all-party agreement. This document is the legal standard for any issues and can be streamlined for businesses looking for contract automation.
Confidentiality Agreements
These days, confidentiality is more important than ever before. Data is a valuable currency in today’s world, and cybercrime is more sophisticated than ever before. It’s very important that employees understand data confidentiality and protect any trade secrets and business ideas.
Some companies hire employees for their innovative ideas and designs; it’s important that anything developed by them during their tenure belongs to the company. This is another reason for confidentiality agreements. Ensure they’re signed and processed before the work begins.
Service Contracts
Service-based businesses need service contracts to outline the responsibilities and liabilities of the service provided. Unlike products that have a physical manifestation, issues with services are harder for consumers to quantify. Service contracts help protect businesses and consumers.
A service contract will lay out the terms and conditions under which you provide the service to customers. It also outlines your responsibilities and liabilities reducing any misunderstandings that might happen in the service process. The service contract should also outline any fees.
Terms of Use Agreements
Confidentiality agreements, or non-disclosure agreements (NDAs), are used in business-to-business transactions. If you want to partner with another business, you might need to show them some of your products or processes first, but there’s a chance of corporate theft.
To eliminate the chances of a business competitor stealing your trade secrets, they will have to sign a confidentiality agreement before you enter negotiations. After signing an NDA, any business you are dealing with agrees to hold company secrets in the strictest of confidence.
Stock Purchase Agreements
Small businesses and start-up businesses need to raise capital to get off the ground. There are a few ways of doing this, such as investors and loans; however, one of the most popular methods is to sell stock in the company. For this, companies need a stock purchase agreement.
Stock purchase agreements can run from a few pages to around 50 pages depending on the complexity of the deal. Details that need to be included in the document are the type of stock, the price of stock, the number of shares, and the warranties of investors looking to buy stocks.
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