Contracts are your lifeblood. They detail the rights and obligations between you, your business partners, and everyone else involved in your business. When a party doesn’t perform, the first place your need to look is your contract. This list represents the bare minimum contract requirements.
1. Entity Agreements
Whether you’re an LLC, Corporation, or Partnership, you and your business partners must agree on how to run the business. Don’t leave it up to a handshake or an email exchange. Get everyone’s thoughts on paper to reflect the true intent of all the parties. This agreement should spell out what happens in the event of a disagreement, bankruptcy, distribution of profits, and what work each owner is expected to contribute. Also, consider what happens if one partner dies, becomes disabled, or otherwise wants out of the business. The cost of having a lawyer draft this document in the beginning is significantly less than the cost of litigating a dispute that arises because there is no clear course of action.
2. Supplier Agreements
Your suppliers are the manufactures and distributors of the goods you ultimately provide to your clients. Most suppliers are going to hand over a form contract to you and expect you to sign. Don’t sign this contract blindly. Instead, take some time to go over it, and if it’s significant enough, have your attorney review it. Try to negotiate on this contract to get some more terms in your favor.
3. Sales Agreement
This is the agreement which you send to each new client or customer. It should describe the product or service so the customer knows what they are receiving, how much the product or service will cost, and when the product or service will be delivered. It should spell out the collection policy and how and when the customer is expected to pay. If you’re extending credit, you should consider adding a clause indicating any interest that will be attached if the client doesn’t pay on time.
4. Non-Compete Agreements
Non-competes prevent an employee from learning your business system and then taking your system and starting their own business. Since a broad non-compete can prevent a former employee from making a living, non-competes are typically heavily scrutinized by courts. Louisiana has specific laws for non-competes, so make sure you’re non-compete is drafted by a Louisiana attorney.
5. Non-Disclosure or Confidentiality Agreement
Your trade secrets and customers are the most prized assets of your business. You don’t want a disgruntled former or current employee disclosing that information. Make sure to use broad language when describing the information you want to keep confidential. Make sure employees sign this when they are hired.
6. Social Media Policy
Most of your employees are going to be using one form or another of social media. Make sure your employees are aware of the pros and cons of using social media at work, especially when the share their thoughts about the company. Employees shouldn’t use it to harass or threaten anyone. This is a new and quickly developing body of law, but if your business doesn’t have a social media policy yet, you should consider drafting one soon.