Business Owners Need to Read the Fine Print

Always get it in writing. You know that. But just as important is to read the agreements we sign. And yet, many of us really don’t.

For example, when was the last time you carefully read an online agreement? You hastily click through the “next, next, next, submit” trying to get to the end of the document so you can get on with your day. And for the most part, that is perfectly fine. Unless your business requires heightened privacy considerations, most online service agreements from reputable companies aren’t likely to get you into trouble.

But unlike your free email account, contracts affecting the core of your business operations should be thoroughly reviewed, ideally with the assistance of a lawyer. For example, if you are entering into a revenue split agreement with another company, what is the length of the agreement? What are the early termination options? Are there any restrictions on how you can advertise or do your business? Signing a restrictive agreement without evaluating its terms can have serious negative ramifications.

If you are starting up your business, the organizational documents and agreements should be drafted or reviewed by a lawyer experienced in business formation and the particulars that must be covered. Have the principals’ and directors’ responsibilities and rights been outlined clearly? What happens if an officer or key employee exits the company? Can a minority owner be bought out upon demand? Can a partner be forced out for misconduct? What is the succession plan if a principal of the business retires or passes away? All of these issues can be dealt with in a comprehensive partnership or operating agreement that is thoughtfully prepared at the onset.

The same level of care should be observed in dealing with financing and insurance documents. The terms of small-business loans must be analyzed and negotiated to make sure they serve the company’s needs without imposing onerous conditions. Liability insurance is critical for any business, including policies that cover injuries to outside parties as well as disputes among partners, shareholders, officers and directors. . Life insurance may be called for with the business or the partners as beneficiaries.  As with loan documents, insurance policies must be scrutinized to understand their coverage as well as their exceptions.

Serving commercial clients in the Fort Lauderdale area, the business attorneys at Salas Law Firm, are well-situated to address your challenges and needs in business planning and formation or in contract drafting and review. To schedule a consultation, contact us online.

The following two tabs change content below.

John Salas

Latest posts by John Salas (see all)

%d bloggers like this: