Operational Issues (Contracts, Employment, Licensing, etc)

What are non-disclosure and trade secret agreements?

These are agreements that prevent employees from appropriating and using confidential business information and trade secrets if and when they leave your business.

Do I need employment contracts for my employees?

You should carefully consider any decision to reduce the terms of your employees’ employment to writing. While you may believe that it is a good idea to have a written agreement so there is no dispute as to the pay and other benefits being provided to the employee, the existence of a written employment contract severely limits your ability to terminate an employee’s employment should there be a need to do so. You should consult with an attorney to determine whether you really need employment contracts for your employees as the need for an employment agreement and the terms that should be in the agreement vary significantly for each type of business. It is a good idea, however, in the case of key employees, to have non-disclosure, trade secret and non-competition agreements.

Do I need to have my employees sign a non-competition agreement?

The need for a non-competition agreement depends on the type of business you have. Non-competition agreements are a good idea if you find it likely that an employee could leave your business and take your clients or customers to a new business. Non-competition agreements are more likely to be enforced by the courts if your business offers a unique product or service which is not commonly available in your geographic area and your employees receive specialized or unique training while working for you.

Do I need contracts for my customers?

This depends on what you provide. You can put contact terms and conditions on the back of a purchase order form. Well drafted terms and conditions are a valuable tool in protecting your business. If you are providing a service, you should have a contract that:

  1. Clearly identifies the services you will provide; and
  2. Includes any provisions required by law; and
  3. Includes terms and conditions that protect your company; and
  4. Provides for a dispute resolution procedure that must be complied with before a suit can be filed; and
  5. Requires any lawsuits filed against your company to be filed in your home county; and
  6. In the event of a lawsuit, provides for attorneys fees and costs to be awarded to the prevailing party.