Thursday, December 12, 2013

3 Agreement Types Every Entrepreneur Needs

Chas Rampenthal who is a legal counsel at LegalZoom, an online provider for legal solutions, has some advice for entrepreneurs who are wondering about legal agreements. In this article he discusses three main agreement categories that almost any business can benefit from. It is best to put these agreements in place early in order to mitigate future legal risks. These categories include:
·        Owner Agreements- All owner agreements have similar functions of ensuring that “the deal between co-founders is set in stone so that everyone can focus on building the business”. These agreements outline ownership percentages, capital contributions and disbursements/salaries, and details of what will happen to the business if you decide to part ways.

Ø  Operating agreement
Ø  Shareholders’ agreement
Ø  Founders’ agreement
Ø  Partnership agreement

·        Worker Agreements-These agreements include employees as well as independent contractors. If someone is working for you then you need to have the terms of the deal fully fleshed out before the work commences. The agreement should set out the duties, timing, payment, and assignment of inventions, confidentiality, non-solicitation, and other engagement specific details. Another thing entrepreneurs need to watch out for is improper classification of workers. The penalties for this can be stiff including back pay, benefits, vacation and even tax and withholding problems.

Ø  Independent contractor agreement
Ø  Employee Agreement

·        Customer and Vendor/Supplier Agreements- Within the e-commerce industry, these contracts are typically “click wrap” agreements that specify the terms of service and privacy policies that set the service level and expectations for the consumer. When it comes to vendors and suppliers, these agreements ensure that your needs are met and by proxy, the needs of your customers. The terms of the agreement should include indemnification, exclusivity, and limitations of liability.

Ø  Customer agreement
Ø  Vendor/Supplier Agreement

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