contracts most companies should have

The Law Firm of Ekaterina Mouratova, PLLC

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Contracts Most Companies Should Have

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Why contracts are important

Having right contracts in place

• ensures that business is run smoothly by setting forth certain responsibilities and procedures

• precisely determines the rights and interests of the parties• protects from unexpected liability • prevents misunderstandings and arguments between the parties• enforces the agreed upon rights and interests of the parties• helps to avoid protracted and costly litigation• helps to avoid surprises in general


Operating Agreement

•depending on the legal structure of the company it may be a shareholder agreement, if a business entity is a corporation, a membership agreement, if it is a LLC, or a partnership agreement in case of the partnership

•serves as guidance for the business relationship between the owners of the company

•sets forth the rights, interests, and responsibilities of the company owners (e.g. voting rights, participation in the management of the company, distribution of profits and losses between the owners, transferability of ownership interest in the company, capital contributions and many others)

•sets forth methods and procedures of company operation and management (acceptance of new owners, organization of the owners’ meetings, loan application procedures, evaluation of company’s assets, dissolution of the company and many others)


Employment or Independent Contractor Agreement

•sets forth the terms and scope of employment

•states vacation policy, absence of leave right, overtime requirements and compensation, fringe benefits (e.g. health insurance and pension plans), reimbursement of expenses and other policies of the company

•spells out the procedures for performance reviews, discipline actions, and termination of employment

•confidentiality or non-compete requirements •Intellectual property matters

•all other matters the parties negotiate and agree upon as a condition to employment


Confidentiality Agreement•entered into with everybody who may have access to company’s inner information for any purpose (e.g. professional consultants, employees, business partners, vendors, investors, and many others)

•binds parties to keep certain business information as a secret

•prevents them from disclosing this information to competitors

•prevents them from taking advantage from this knowledge to benefit themselves


Intellectual Property Assignment Agreement

The law is that the ownership of the work product automatically lies with its creator. Intellectual Property Assignment Agreement:

•is entered into with everybody who may create something for the company during the course of their professional involvement with the company (e.g. a business partner, independent contractor, employee)

•requires the creator to automatically assign his/her ownership in the intellectual property to the company (e.g. a new product, service, method of operation, marketing materials, name, concept, idea or anything related to the business)

•prohibits the creator from using this product for purposes unrelated to the company (either for others or for his/her own benefit)


Service Agreement and/or Sale Agreement

•entered into with vendors, suppliers and customers of the company•sets forth definite terms of the agreement between the parties•states the performance requirements (divisible or not, assignable or not, etc.)•manages parties’ expectations •identifies parties’ liabilities in case of non-compliance •negotiates particular dispute resolution methods in case of disagreement between the parties •often prevents arguments and protracted litigation


Terms of Use for the Website

Representations made by the company on its website may be an enforceable contract. Terms of Use should contain, among other statements:

•description of the services and scope of representations •restrictions on use•limitation of liability •disclaimers of warranty•rights of the company in relation to its website users•company policies (e.g. refund/exchange policy)•privacy considerations•system requirements •all required notices to its users (e.g. copyright notice, license, etc.)•choice of law and jurisdiction


“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

- Marie Curie

contracts most companies should have

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