Contracts are the trip wire of deals. Here’s why.
- With legit business people, you can’t get started on the work or the payments until you sign the contract.
- Your contract is your reason to write down what has to get done, what has to get paid and by when.
- Your contract makes you memorialize the allocation of responsibility and risk.
- Your contract gives you a written record of what you agreed to.
- If necessary, you can take your contract into court and ask a judge to enforce it.
- You may be able to use your contract to defend yourself against unreasonable demands.
- Also, in the right hands, contracts are pretty.
Here are the 6 contracts you need, what they do, why you need them, and when you need them.
1. Proprietary Rights Agreement
AKA: IP Assignment; Prop Rts Ag (ok, that’s what I call it in my notes and task lists)
What it Does: Law Fun fact: contractors that make stuff for your company own it unless they assign it to your company. So, if you hire people to make stuff for you, get it assigned to you in writing. Also, it’s good practice for employees to assign everything to you, particularly patents that must be initially filed in the name of the human employee.
Why You Need It: Vehicle for your employees, consultants and agents to assign everything they do to your company.
When You Need It: When you ask or hire anyone to make any deliverable for you.
2. Trade Secret Policy and Agreement
What it Does: There is a kind of secrets called “trade secrets” that get a higher degree of protection, but only if you actually keep the secrets secret. Putting a Trade Secret Policy in place is one of the first things you should do (though you also have to enforce it).
Why You Need It: To protect your trade secrets.
When You Need It: When you have something you want to protect as a trade secret.
AKA: Non-disclosure Agreement; Confidentiality Agreement
What it Does: Identifies a bucket of secret information and makes recipient keep it secret.
Why You Need It: You have information you don’t want someone to share, sell or use. MOST IMPORTANTLY, you have a potentially patentable invention and you want to avoid starting the 1 year deadline for filing your patent application. You have a trade secret and you want to keep it that way.
When You Need It: Whenever you start to discuss anything that is not, should not or cannot be known by the public.
4. Services Agreement
AKA: Master Services Agreement; MSA
What it Does: Lists what you’ll do, what you need from your customer, how much they’ll pay you, how you’ll fight disputes and deadlines.
Why You Need It: It’s the only way to fairly and accurately list what you are obligated to do, what you need from your customer and what you’re going to get paid and when.
When You Need It: When you get hired to do a project. If you get hired for more than one project, then the agreement can become a “Master Services Agreement” with a Statement of Work you fill out and sign with each project.
What it Does: Tells website visitors when, why, how and what information you’ll collect about them and how they can get it or correct it.
Why You Need It: You have a website with a contact us box (or any other means of collecting information about visitors).
When You Need It: When you set up your website.
AKA: Terms & Conditions; T&C
What it Does: Establishes the rules upon which people can use your website and your content.
Why You Need It: To protect your intellectual property on your website. To give yourself rights to kick people off your site. To make it clear that you won’t be responsible for user generated content (if applicable).
When You Need It: You have a website with anything you want to protect.