‘Why it’s important for an attorney to review business agreements,’ a new report from the Atascadero attorney
-It’s exciting to open a new business or realize business has grown and it’s time for the next level. But, before signing and formalizing any agreements, having an attorney review them can prevent future headaches and Adam Daner of Atascadero’s Daner Law Firm has some solid business reasons for such a review.
Starting a new business means more than just signing a lease, although that is important. Most businesses need professional services contracts, purchase/sales agreements, employment offer letters, insurance policies, equipment and vehicle lease agreements, sometimes partnership agreements, and more. It’s important that any business agreement or contract be fair to the business owner and others concerned. At the same time, it’s critical to not include or omit something that leaves the business and owner exposed to risk.
The reason for written agreements or contracts is to clearly document the terms, and by signing, all parties concerned agree to the terms. Even though a handshake can represent an intent to negotiate in good faith, it is rarely a solid binding agreement. People forget what they agreed to, or misinterpret verbal agreements. No one wants to wind up in a court battle, especially one without clear and strong documentation about the terms of an agreement.
“A review by an attorney,” said the Atascadero attorney, “is the best way to make sure that all the terms are covered and that you have all of the agreement and contract forms, with the correct language, that you need to conduct business.”
Some of the top agreements and contracts that are important to review include:
- Professional service contracts: Business often depends on the services of professionals who are not employees because they bring a level of expertise and experience that is beneficial. These professionals are usually independent contractors. It’s important for the contract to not include any terms that could be interpreted as establishing an employer/employee relationship.
- Partnership agreements: Partners are essential co-owners in the business so it’s important to address the percentage of ownership, financial obligations of the partners, the responsibility of other partners when one partner want’s to sell his or her share, or retire, or dies or becomes incapacitated. What if the partner is a spouse and there is a divorce? What is the process for partners agreeing to bring on another partner?
- Employee contracts and agreement/offer letters: Is one necessary? If yes, what does the agreement need to contain? It’s a common business practice for corporate executives to come to work under an employment contract that covers terms such as salary, stock options and more. It’s also a common practice to document any employees terms of employment with an employment agreement or offer letter. Such an agreement or letter also includes terms such as starting salary, periodic performance reviews and salary increases, medical or dental coverage and the duties to be performed.
- Contracts with vendors, suppliers and customer sales need to specify terms such as the quantity, cost, delivery times, payment terms, delivery terms and circumstances that void the contract.
- Lease agreements including facilities, vehicles, equipment: What are the insurance requirements? Who is responsible for damages and repairs? What if a vehicle or the equipment is faulty? Is the duration of the agreement realistic? Is the agreement lease to purchase?
- And finally, it’s also a good strategy to have an attorney review all insurance policies before they are signed. There may be more cost-effective insurance coverage available that can save some money and provide better essential coverage.
Every business and industry has different exposures to risk and different needs. A review by an experienced business attorney such as the Atascadero attorney is going help make sure the best interests of the business are served, reduce risk and avoid unnecessary expenses.
The Daner Law Firm practices full service business and estate planning and civil litigation in all state and federal courts in California and is also licensed in Nevada. Practicing law since 1994. Mr. Adam M. Daner, has the breadth of experience to serve clients in a variety of matters. Areas of practice include estate planning, real property, business planning and litigation, construction claims and defect litigation, landlord/tenant controversies, governmental entity representation, employment and insurance related matters.
Daner Law Firm
4555 El Camino Real, Unit J
Atascadero, CA 93422