It’s great to have trust…I’m a fan of trust. Success in business unquestionably requires some willingness to cooperate with and have faith in others. However, when it comes to business, I cannot tell you how many oral agreements have led to misunderstandings and legal disputes; the details of which can be difficult or impossible to prove in court. In certain situations, written contracts are mandatory…good to know just in case you wake up one day and find yourself in a lawsuit.
You should put most every agreement in a written contract
– some examples are:
• Partnership Agreements: They spell out terms and expectations of owners and help to settle in advance what happens if one owner wants to leave the business or when partners disagree about things. (that never happens right?)
• Employee Agreements. Make sure that when hired, employees sign nondisclosure agreements so they keep your valuable trade secrets (pricing, formulas, recipes etc.) confidential.
It varies from state to state for instance, by Maine law, you must put the following in writing:
• The sale of goods for more than $500
• The sale of real estate.
• Agreements that take longer than one year to complete.
• Home Construction Contracts for more than $3,000 in materials and services are now required to include specific information and be signed by both parties.
Many business owners try to save money by doing everything they can by themselves including contracts and other agreements. Doing some legwork can really reduce the cost of legal fees – but are not a substitute for a good legal review to make sure that your interests are well protected.
Be Diligent- Be Proactive- Be Safe.