Creating Legal Contracts for Your Orlando Small Business
The following quote has been attributed to Samuel Goldwyn, an American film producer of the early twentieth century:
A verbal contract isn’t worth the paper it’s written on.
While there is an obvious element of irony – and more than a little unsophisticated usage of language buried within this curious citation – there is also more than a hint of real-world verity in Goldwyn’s aphorism.
Because, while it is tempting to want to believe that a handshake and a verbal agreement should be the basis for all human transactions, in the world of business, at least, there is no real substitute for well-written, legally binding contracts between any two parties that wish to have any sort of lasting and mutually beneficial understanding between them.
Of course, contracts do not have to be written at all to be legally binding; an oral contract is just as enforceable as a written one. However, having contract terms that are well-defined, written down, and strongly anchored in existing law will help eliminate misunderstandings at a later date. All contracts should be fully reviewed, as memories tend to be faulty and different people will recall different aspects of a verbal agreement in ways that will benefit them the most. It’s just human nature.
In addition to protecting you from any future disagreements over contractual terms and issues, having strong written contracts reinforces the commitments that two parties intend to make with one another. A strong contract specifies, in detail, which party is doing what, how it is being done, when it is being done, and how much money, if any, is going to be exchanged when the contract is fully executed.
When both parties fully understand the terms of a contract, each can more accurately plan for the future, both financially and technically. Whatever penalties might be called for, should a contract be breached, should also be part of any written agreement. Finally, strong contracts also limit and define the extent of your liability, and that of the contract’s co-signer, should a deal or agreement break down.
Common Business Contracts
There are many different kinds of contracts. Here are some common types used in commercial enterprises:
Business Structure Contracts
The documents that establish a business are themselves contracts among its organizers and/or owners. They include articles of organization, partnership agreements, operating agreements of limited liability companies, etc. They set the terms of investments and responsibilities, the division of profits, etc.
Sales and Service Contracts
Sales and service contracts spell out the terms of a sale of goods or services, including payment terms, warranties, and the rights and obligations of both parties.
Employment and Independent Contractor Agreements
These contracts cover the duties, rights, responsibilities and compensation of all personnel, whether they are full-time employees or independent agents.
Non-Disclosure, Confidentiality & Non-Compete Agreements
These contracts protect confidential information crucial to a business and may include the non-disclosure of client lists, trade secrets, and any other critical or proprietary information. A non-compete contract limits its signer from engaging in a similar business or commercial activity for a specified period of time should he or she leave a company for any reason.
Other Types of Contracts
These may include:
- Franchise agreements
- Waivers and releases
- Lease agreements
- Licensing agreements
- Credit agreements
- Joint venture agreements
- Promissory notes
- Manufacturing contract
The Fine Print
In order to ensure that your contract is drawn up in the way you intend it, be sure to go over its terms with your attorney before offering it to another party to sign. Of course, if you are being offered a contract to endorse, the same advice prevails. You are entering into a legal relationship with another person or entity and your signature is evidence that you agree to the contract’s terms and stipulations. You can be held liable should you break the agreement, so be sure to read the fine print.
When writing a contract, you don’t necessarily have to re-invent the wheel. Many contracts have standardized provisions, which have proven to be useful as templates for different types of agreements. You can access these contract models from the internet, or from your lawyer. Then you can customize them to fit your exact needs, knowing that much of the formal legalese has been thoroughly vetted by law courts over the course of time.
As a business person, you want to spend your time working in your chosen field of endeavor, whether it is creating and marketing a product or providing a service for others. Having strong, legal contracts for your business will protect you from having to spend endless hours in a lawyer’s office or a courtroom engaged in potentially damaging litigation. Here’s another phrase to ponder, and which, unlike Goldwyn’s, is completely unambiguous: “Forewarned is forearmed.”
Hiring an Experienced Orlando Business Lawyer
Contact an experienced Orlando business lawyer to assist with the development of strong, well-defined business contracts that protect your interests.