The Most Common Legal Documents – Continuation

Non-Compete Agreement

In modern-day business culture, it is common for businesses to have restrictive covenants such as non-disclosure agreements for both new hires and existing employees. When well drafted, such an agreement helps protect a company’s proprietary and other confidential information. Non-compete agreements usually limit an employee’s ability to work in a competing business in a certain geographical area for a specific period of time. For example, an individual who is bound by a non-disclosure agreement and resigns from their job in Boston might be prohibited from working for a competing company in Massachusetts for up to one to two years.

Rules that govern non-compete agreements may vary across states. However, as long as a non-compete is reasonable and valid, most state courts will enforce it. One of the factors that determine the validity of non-competes is the presence of a bargain for promise or performance, also referred to as consideration. For new employees, consideration may exist if they sign a non-compete when they are initially employed. In other words, the employer’s promise to compensate the new hire for services rendered may be enough consideration. For existing employees, consideration requires other factors, such as a promotion, a bonus, or an increase in wages. In an event where the existing employee does not receive any additional benefit from signing a non-disclosure agreement, such an agreement may be unenforceable.

As for the reasonableness of a non-compete agreement, three factors are considered. The first is whether or not the limitations are necessary to protect the business or employer’s goodwill. The second is whether the restraint imposed on the employee is reasonably required to protect the business and its goodwill. The third factor is whether the public will suffer from the loss of the employee’s skills or services.

It is essential to consult an attorney with a good knowledge of employment law in your location if you are considering whether or not to use a non-disclosure agreement.

Memorandum of Understanding

A Memorandum of Understanding, commonly referred to as MOU, lies somewhere between a handshake and a formal contract. It plays a crucial role in documenting the conversations you have with your partners, suppliers, and other people involved in your business. An MOU is a great way to put the terms of a relationship or project in writing, but it is not always legally binding.

Other common legal documents include company bylaws for corporations, buy/sell agreements, and employee’s handbook.

Conclusion

Regardless of the type or size of your business, it is essential to have the correct legal documents in place. This can help you avoid problems that may hinder your business from becoming successful. It also ensures that you comply with state and federal regulations and avoid expensive legal disputes that may drain your business’s resources.…

The Most Common Legal Documents – Continuation

Employment Agreement

When someone is working for you, there’s an employment contract. This may be oral or implied. However, without a written employment agreement, the terms of employment may be subject to misunderstanding and miscommunication. A written employment agreement clarifies the employer and employee expectations and helps avoid future disputes by laying out essential aspects of the arrangement. An employment agreement covers the position, duties and responsibilities, working hours, wages, compensation, and other benefits, confidentiality, non-compete and non-solicit clauses, and termination and notice period.

A written employment agreement creates a platform where both parties can negotiate the employment arrangement. It can also be used to protect copyrighted material, particular trade secrets, and other confidential information by inserting a confidentiality clause. In the event that a dispute occurs between the employer and employee, the employment agreement can be used as a reference point for resolving the dispute. Companies like Best Mattress Picks use Employment Agreements on a regular basis to make sure their employees are treated fairly and any and all disputes are resolved amicably.

Terms of Service/Privacy Policy

Terms of service and privacy policies are some of the most common legal documents. They govern the terms and conditions for using a mobile application or business’s website, and how the data collected from the user will be used. Terms of service and privacy policies are especially important when it comes to trust, online payments, and security. When clients provide you with information, they expect you to not share that information with anyone else, whatever the circumstance may be. Your privacy policy is essential to your client’s trust and determines the level of comfort they have in using your website or mobile application. Without a terms of service and privacy policy, you may be unable to obtain a payment gateway for your mobile application or website. Consequently, accepting payments online will not be possible. The terms of service and privacy policy also enable you to take action if a user misbehaves in your platform, for instance, by posting offensive content, or hacking.

Non-Disclosure Agreement

A non-disclosure agreement is indispensable to maintaining a business’s competitive advantage. Before you share any confidential information with your employees or partners, it is essential to have your confidentiality expectations communicated in writing so that they understand the responsibility of having access to this information. A non-disclosure agreement ensures that all proprietor information you share with your partners or employees does not become public. By prohibiting your partners or employees from disclosing the company’s proprietary and other confidential information, a non-disclosure agreement protects your intellectual property and business practices from getting into your competitor’s hands. If an employee violates the non-disclosure agreement, you can sue them for damages to compensate for any loss in profits.…

The Most Common Legal Documents

Legal documents are crucial to protecting business interests, and those of the owners during a company’s lifetime. Surprisingly, however, not many businesses put in place the most vital documents when starting up. In this article, we will discuss the most common legal documents that you should know and why they are essential.

Business Plan

Most businesses require funding before starting up. A well-crafted business plan is indispensable to attracting investment to your business. The three key things you should consider when creating a business plan include the problem you intend to solve, how you intend to solve it, and why your business is in the best position to solve it.

Ideally, a business plan should be structured in such a way that it comprises all the details that a potential investor would like to know about the business. Some of these details include the products or services you are selling, your sales and marketing strategies, who manages the business, requirements for effective operation, your target market and how you intend to reach it, and how you will deliver your product or services to your customers.

In a nutshell, your business plan is a statement of why you need funding, how you will spend it, and how you will earn it back. This enables potential investors to make an informed decision about whether they should invest in your business or not.

Partnership Agreement

It is often easier to start a business with a partner to share the risks and costs involved in starting a business. When creating a partnership, you and your business partner need to set the terms of your business partnership ahead of time. This sets the ground rules for how to go about issues that may arise in the course of your partnership. Without such a framework in place, legal disputes may occur and drain the company’s resources in a way that the company is unable to recover.

Ideally, a partnership agreement should include the partners’ names, their contributions in terms of business equipment, money, or land, the division of authority and labor, the partnership’s duration, how to add new partners, and what happens to the partnership when a partner leaves the business or dies. You can obtain information about the necessary steps for registration, filing, and tax requirements from your local Secretary of State’s office.

LLC Operating Agreement

Limited liability companies provide some benefits that are not enjoyed by partnerships or sole proprietorships. Most of these benefits involve reducing personal liability as much as possible. Other benefits that make LLCs more attractive than partnerships and sole proprietorships include tax and cash flow benefits.

Forming an LLC is relatively easy. All you need to do is visit your local Secretary of State’s website and file your articles of organization. If your LLC comprises two or more owners, it is essential to set up an LLC operating agreement that defines how your company will operate and how it should be taxed.

There are various rules and regulations that have been put in place by state laws and the IRS concerning the operation of LLCs. An operating agreement allows you to adjust some of these rules to how you intend to operate your business.

An LLC operating agreement should include the name of the owners of the LLC, division of labor and authority, how responsibilities are distributed among the owners, and whether the company should be taxed as a corporation or as a partnership. Filing your articles of organization without creating an operation agreement leaves you vulnerable to civil penalties and financial liabilities in the event that you are audited by the IRS or someone sues you.…