11 Important Legal Documents For Small Businesses

July 13, 2016

Legal documents play an essential role in protecting the interests of the business and business owners over the course of a company’s lifetime.

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Legal documentation is a form of communication, it should be done timely. When an addendum is made it may be necessary to also verbally communicate this information to appropriate care givers. For example, an addendum reflecting an allergy is not something that should be slipped into the patient’s medical record without verbal communication to subsequent care givers and review of the previous care provided to see if there are any implications.

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Preparing and deposition notices
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Drafting discovery documents
Drafting briefs and legal memoranda
Maintaining files
Checking cites
Performing legal research, non-legal research and medical research
Legal work involved with investigations, outside vendors etc
Developing a computerized information retrieval system

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Here is a list of the most common legal documents to help you determine what your small business needs.

Running a small business involves legal documents. Under business collaboration category, there are several legal documentation filing that might be needed for your small business such as:

MOU (Memorandum of Understanding)

A Memorandum of Understanding (MoU) is a document in which two or more parties declare that they agree on a common course of action or business. It is the first stage of the making of a contract. An MoU is generally recognised as binding even though it creates no rights and obligations in itself. To be legally operative, an MoU must identify the contracting parties, spell out the subject matter of the agreement and its objectives, summarise the essential terms and must be signed by the contracting parties.

Non-disclosure Agreement

A non-disclosure agreement (NDA) is a legal contract stating that certain information is confidential, and the extent to which its disclosure is restricted to third parties. It can be entered into with a person or organisation.

Confidential information includes trade secrets, business plans, business methods and strategies, drawings, charts and more. Software programs and code are also confidential information.

Consultancy Agreement

This agreement comes handy when you or your organization is planning to appoint an external consultant to work on a specific task or assignment for your company. A consultant is generally an expert in his own field who will assist in providing specialized solutions for a temporary period.

In the best interest of both of the company and the consultant, the agreement need to be secured by a written contract laying out basic and specific groundwork for future collaboration. The consultancy agreement will not only safeguard your interests in data protection and intellectual property matters but also serve as a proof if there is a dispute or litigation.

Joint Venture Agreement

A joint venture (JV) agreement is entered into by a group of persons or companies to do business together or to collaborate on a particular project without losing their individual legal identities. Such an agreement is legally binding and clearly lays down the areas of cooperation and divergence, and makes provisions for profit-sharing and operations. Usually, before entering into such a formal agreement, the parties sign a Memorandum of Understanding (MoU).

Business Transfer Agreement

Business transfer agreements allow the sale of an unincorporated business, that of a sole trader or a partnership, to a company owned by the owners of the business. Restructuring an existing business as a company could be attractive for a variety of reasons: it may limit the risk to which owners are exposed, it may allow external investment to be an attractive proposition, or it may allow the separation of management and ownership.

Sub-contractor Agreement

If you are a general contractor having a lot of business you may find it difficult to complete the contract in time or doing everything yourself becomes a bit tiresome. In such cases you can give sub-contract to some other person who can complete your work. You can make a Sub-contractor’s agreement that mentions all the details of the work to be done by the sub-contractor, time limit to finish the work, payment of charges to the sub-contractor, termination of the agreement etc. Making a sub-contractor agreement is usually done in construction fields where large number of buildings are being constructed regularly.

Vendor Agreement

Vendor Agreement is an agreement stipulating the conditions under which the work is to be performed by the vendor. It is a comprehensive agreement covering various aspects such as the quality of goods supplied or service provided, duration of the contract, terms and mode of payment. Such an agreement would be useful to those hosting a large event (a trade exhibition, for example) where several vendors will be selling their wares.

Shareholder Agreement

A Shareholders’ Agreement is simply an agreement governing the relationship between the shareholders of a company. These include their rights and obligations, transfer of shares, how the company is going to be run and how important decisions are to be made.

Software Development Contract

A computer software is an intellectual property created by a software developer. It is protected under the Copyright Act, 1957, where the rights and duties of the owners are specified. Typically, the rights associated with a software lie with the developer who creates it. The developer is entitled to transfer any or more of his rights to a third party by way of agreement.

Software development is a process in which a developer creates a computer software using his programming skills and knowledge according to the specifications mentioned by the company.

Employee Contract

An employment contract is necessary when hiring any employee or consultant, whether part-time of permanent. It is a comprehensive document that addresses all terms and conditions governing employment, as well as the rights, duties and responsibilities of each party with respect to the other. Common points would include breakdown of salary, date of joining, notice period and non-compete clause.

Legal Notice

A legal notice is a formal communication to a person or entity informing him that you intend to undertake legal proceedings against him. It is a step taken before filing a suit, and is meant to warn the other party that legal action may be taken against him/her, if he/she fails to comply with some specified condition.

For example, a legal notice served upon a tenant by a landlord for non-payment of rent usually states that if the tenant fails to pay the outstanding amount by a specified date, the landlord will take legal action against him.

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