If you are the owner of a business, it can be important for you to understand all the fundamental elements that are involved in entering into a valid, legal, and enforceable contract. Below, we will summarise some of the most critical elements that are common for every contract and for a business to achieve success.
Written Agreement Between the Parties Involved
Perhaps the most important aspects of any business contract are the terms of the agreement that exist between the parties. A verbal agreement or agreeing to an agreement usually does not have any significance in the court of law.
You may have great difficulty in proving your facts and may not be able to enforce any issues that may be based on the alleged agreement. Because appropriately documenting a legal contract can be challenging, it is advisable to take help from a qualified Business Lawyer In Los Angeles.
Particular Terms and Conditions
Your corporate contract should consist of specific terms and conditions that include the formal names of the parties and the obligations by which each is bound. The employment terms, supply terms, inventory terms, lease agreements, and other provisions may vary depending on the particular document.
Termination of a Contract
In any corporate contract, it should contain particular terms that specify how either party can engage in valid termination of the agreement. This can be mandatory in some places, as there might be times when you no longer want to collaborate with another party or one or both parties are not ready to fulfil the terms that the agreement stipulates.
Therefore, it may become necessary for a business contract to include details of how to terminate the agreement without breaching its terms. If you want to terminate a contract relating to trademarks or other types of intellectual property, then seeking legal advice from a competent Trademark Lawyer In Los Angeles can be beneficial.
Resolution of Disputes
Some business owners may encounter issues and disputes that arise involving their employees, the government, or vendors who provide services. This makes it important to ensure that the contract provisions addressing disputes are clearly delineated. This makes it easier and more convenient to resolve any disagreements that arise between the parties in a reasonable way.
Clause Mentioning Confidentiality
Clauses that involve confidentiality that can prove to be invaluable for businesses that involve rapid growth and turnover, especially when the company onboards various new employees and executives.
This is because some of the employees may have access to sensitive business information throughout the duration of their employment. Leaking or sharing information with competitors can pose serious risks for the company. This is why to protect a business it is essential to mention this clause in a contract.
Choosing a Business Entity Type
For a business owner, it is important to decide what would be the business entity type for your entity before formalising anything. There are various types of business entities, such as limited liability companies (LLCs), sole proprietorships, and corporations, that are commonly used. Each structural form has its advantages and disadvantages.
Because it can be confusing to determine which entity type may be the best fit for your particular business, this is why it may be necessary to contact an attorney who has experience helping companies choose what may be most advantageous in the long run. Structuring your business under the most appropriate entity form can add flexibility to your business, help you run your business efficiently, and provide certain tax benefits to you and your company.
The Benefits of LLC Formation
There are many benefits of choosing an LLC as your business entity. The structure limits the amount of liability that the business owners may incur, providing protections for them personally for any debts that the business accrues. So long as the business owners fulfill all of the requirements set forth for them under the LLC entity structure, their personal liability will be constrained.
Many entrepreneurs are unaware of the fact that forming an LLC can have so many benefits. However, LLCs are not the only business entity that may be beneficial for business owners. For example, registering as a corporation could potentially infuse the company with the spark of flexibility that helps it raise necessary funds and organize all of its essential functions.
If you plan to publicly trade your business at some point, an LLC would generally not be the appropriate structure for your company. This is because LLCs may not be used for public trading, as stipulated in the U.S. Securities and Exchange Commission (SEC) rules.
If you begin as an LLC but wish to go public, you can also dissolve your LLC and reincorporate. This can safeguard all the corporate officers and business owners from personal liability as long as they abide by all legal requirements.
You can learn more about the best path to growth for your company by discussing your business with an experienced business attorney. In addition to finding a corporate lawyer that you can trust, you should also consider engaging the services of a tax professional who can help you manage costs and abide by all relevant laws.
Seeking guidance from legal and tax professionals can give you clarity on the pros and cons of different types of business entities, tax consequences, and the flexibility factors that can open different avenues for your business as well.