I was contacted one day by an individual that owns a small local business.  One of his former employees had recently quit, started his own company within the same industry, and was attracting clients away from his former employer’s business.  I asked the business owner if the attorney that had assisted him in setting up his LLC had also recommended creating Non-Compete and Non-Disclosure Agreements for employees to sign upon employment.  To my surprise, he stated that his attorney had never mentioned it and the thought had never crossed his mind either.  He said he prided himself in hiring good and honest employees.  He just couldn’t believe that such a loyal employee that he had treated so well could turn around and steal his clients away.  Because this former employee had no legal obligation to not compete with his former employer, there was little recourse for this business owner.

This incident highlights the importance of having legally sound business contracts that meet a business’s unique needs.  A common mistake is to assume that a “cookie-cutter contract,” a generic contract where a business simply pastes its name into the document, will provide the necessary legal protection for a business.  It is important to have an attorney with business law experience custom draft contracts to meet your business’s needs.  Some of the common business contracts include Non-Compete Agreements, Non-Disclosure Agreements, Vendor Agreements, Sales Agreements, and Independent Contractor Agreements.  Documents such as these protect your business’s most valuable asset:  how it does what it does.  By acquiring contracts that fit the needs of your business you can greatly minimize potential risks and liabilities your business faces.

For additional reading:

A Buy-Sell Agreement

A Business Succession Plan

 

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