How Business Owners Can Avoid Getting Sued

4 Legal Agreements to Help Avoid Getting Sued

Law can be an expensive and sometimes complicated thing.

And for most business owners, talking to a lawyer ranks somewhere between going to the dentist and getting an audit by the IRS.  

But with that said, getting sued, receiving a demand letter or watching your intellectual property get hijacked by a competitor isn’t what most people would consider a walk in the park, which is why having the right agreements in place is absolutely crucial to avoid getting sued.

“Getting sued?” you might be asking.

That’s right…getting sued by someone you’ve done business with who’s either:

  • Unhappy with your services,
  • Unhappy with their results, or
  • Trying to get something for nothing and feels the courtroom is the easiest way to drag things out.  (You’d be surprised.)

So with that in mind, let’s take a look at four specific agreements, that when done properly, can go a long way towards protecting yourself, your business and your peace of mind.

Owner Agreements.  If you are in business with another person, it doesn’t matter if your business structure is a partnership, an LLC or a corporation – you will need an owner agreement.  These can take the form of a partnership agreement, an operating agreement, a founders’ agreement or a shareholders’ agreement and details how ownership in the company is being distributed, compensation, capital contributions and other operational issues – including what happens if someone wants out.

Everyone goes into business with the best of intentions.

But I can’t tell you how many times a simple little document like this has nipped a potentially toxic situation right in the bud!

Employer Agreements.  These agreements set the rules for how your relationship with employees will be governed and should also be used to cover independent contractors.   Having an employment agreement for everyone ensures that expectations for job performance are spelled out and what the grounds are for termination.

Again, most employer/employee relationships don’t start out being adversarial.

But over the weeks, months and sometimes years of that relationship, things are bound to come up that can strain the relationship.  However, when you have a good employer agreement written (plus doing the right thing by them in the first place, of course), the potential for bad feelings or adverse legal action goes down precipitously simply by the fact that everyone knows what’s expected of them and where things stand.

Vendor/Supplier Agreements.  Most business owners don’t have a problem with this, since it’s always a good idea to have a formal agreement with vendors and suppliers to help ensure everyone is doing what they said they would.

With these, you’ll want to make sure issues of exclusivity, indemnification and liability limitations are all clearly spelled out in your vendor agreement in order to protect your business against claims where a supplier is at fault.

Customer Agreements.  And last, but certainly not least, you’ll want to have some type of customer/client agreement in place for people who contract your services.

This is especially true for all of my coaches, consultants and service providers who have a non tangible service, where it’s the process that’s being purchased (e.g., 7 coaching sessions for an hour each on marketing your business), rather than the results (e.g., an increase of 50% in sales).

Oh, and if you’re selling stuff online, don’t forget your sales letter there either!

In those cases we’re talking about privacy agreements, terms of service and things like that.  

So there you have it, four legal agreements to help avoid getting sued.

But don’t worry, if you’re not sure where to start or feeling a little overwhelmed, then just email support@reiblaw.com to schedule your complimentary 30 minute session with myself or someone from my office, and we can help put together a game plan that works for you.