–Misunderstandings are annoying at best and, especially in business, can have serious business setbacks. Atascadero attorney, Adam Daner, has recently released important information to help businesses avoid the conflicts that can arise without contracts or some other written agreements.
Written agreements with everyone in the business sphere, including employees, contractors, partners, vendors, suppliers, financial institutions, and more can be viewed as a form of insurance against misunderstandings resulting in legal action, interrupted business, and loss of trust.
The types of contracts, agreements, and documentation include:
- Letters of Intent (LOI): An LOI is a document that outlines an understanding between two or more parties about their intent to formalize a legally binding agreement. Other terms for the LOI are “heads of agreement,” “term sheet,” and “memorandum of understanding.” The LOI and other such documents are generally non-binding.
- Financial agreements: Traditional financial institutions require signed agreements, but sometimes loans come from family and friends. Regardless of the good intent of the lender or the borrower, draw up an agreement regarding the amount, interest on the loan, and payment arrangements and everyone is protected.
- Partnership agreements: When starting a business with a partner, or adding partners later, agreements that specify the many conditions of partnership or co-ownership, are critical. These kinds of agreements define conditions such as the percentage of the business each partner owns, the financial obligations of each partner, how to sell one’s share of the business, the process of bringing in new partners, and what happens if a partner dies or is incapacitated.
- Vendor, supplier, sales and purchase agreements: These kinds of agreements merchandise being sold or purchased, the costs, quality of merchandise, delivery time frames, manufacturing terms, return policies, and the duration of the contract. These agreements can also specify remedies in the event that one of the party’s fails to perform.
- Employee contracts: When an employee is hired under certain circumstances, a contract may be the best way to document those conditions and avoid future misunderstandings. A “contract” does not necessary make an employee an independent contractor. The circumstances, or terms, of employment can include stock options, commissions, workplace (even a home office under certain conditions), hours and days of work and other conditions that don’t violate labor laws.
Even though the handshake remains a polite, even elegant, expression of good intent, not formalizing business agreements in writing can be a huge mistake simply due to the failings of human memory. Court proceedings, damaged relationships and community goodwill are expensive in terms of hard cash and bruised business and reputations. It is much safer to rely on written agreements, contracts, and the advice of an experienced business attorney, such as Atascadero’s Daner Law Firm.
The Daner Law Firm, a Professional Law Firm (APLC), advises businesses and individuals on matters concerning establishing a business, preparing contracts, landlord/tenant, homeowner association documentation, and real estate and construction matters. Mr. Daner has handled all types of construction claims from the vantage point of developers, general contractors, engineering professionals, material suppliers, and subcontractors.
Daner Law Firm
4555 El Camino Real, Unit J
Atascadero, CA 93422
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