Entrepreneurs & Contracts: the basics

Before you even start a company, or else plan on developing professional relationships with external agencies, prospective partners and employees, it is critical to understand the laws of contract. When there is a dispute, and often there is at least one during the development phase, all parties will look to the contract. As such, having a lawyer on board from the outset will always be an advantage for your business. Here is a brief list of issues to consider:

• Non-Compete Clauses: you want to protect your business by impeding your partners’ or employees’ rights to directly compete with your business if they leave. This would be framed within a specific time period, limited to a geographic area, but is very important because they possess inside knowledge of your competitive advantage.
• Non-Solicitation Clauses: you don’t want your partners or employees soliciting your colleagues or your customers away from your business.
• Non-Disclosure Agreements: NDAs are no unreasonable, so long as the language in the contract is clear on protecting your right to confidentiality.
• Moonlighting and Loyalty: This may or may not be necessary, depending on the nature of your business. A lawyer could assess its need once you discuss your goals.
• Ownership of Intellectual Property: You may want to protect any processes, templates, systems, or methods created by an employee by retaining any IP rights over them. A contract on the outset will provide necessary protections so that work product created under your business does not ultimately go to a competitor.
• Use, Licensing, Technology Transfer: Social media companies will likely need to outsource its products or services through other digital or online mechanisms, usually other companies. Often, partnerships are created to facilitate such business development. In this context, having contracts to protect the use and licensing of your work product, so that it doesn’t leak or be misused, will make your transitions to the next stage much more efficient. Similarly, if you are interested in commercially exploiting your methods, processes or inventions (Technology Transfer), you will need contracts to protect your financial interests.

Spending a little time on developing a legal structure through contracts, while slightly time-consuming, is a real investment in your new (or old) business. The health of your business can make or break based on the contract, often when you must make strategic decisions for the success of your business. Retaining a lawyer experience with entrepreneurs will only enhance the probability of that success.

– Sheheryar Sardar, BroadStreet Times

Sheheryar Sardar, Esq., is a Partner at Sardar Law Firm LLC with substantial experience in entrepreneurship.