Four Types of Essential Contracts for San Diego Businesses

If you are running a successful business, you need to have solid and enforceable contracts. Some business owners think that a handshake deal or an oral agreement is all that is needed. And, sometimes that can be true. If the transaction is a “one-off” or in the nature of pay-as-you-go, maybe nothing formal is needed. But, mostly it is important to have written contracts. A good San Diego business attorney can help with contract drafting and review. Here are the four essential categories of business contracts that every successful business needs.

1. Vendor/supplier contracts

Every business has suppliers of goods and services. Sometimes the necessary goods are commonly available, like paper clips or copy paper. Other times, the supplies and raw materials are less common. In those cases, it is important to lock in sources and materials via supplier contracts. This is true too for service providers such as processors, advertising partners, or repair and maintenance services. These contracts are important for establishing the obligations of the parties, including quality of goods/services to be provided, timing, and the consequences of breaching the contract.

2. Ownership/partnership agreements

Very few businesses are run by one person. Maybe at the beginning, but at some point, every business grows, and partners or colleagues are often brought on board to help the business prosper. Take a restaurant, for example, one partner or owner might focus on the recipes and food preparation while another might focus on sourcing the food, liquor, and other necessities, while yet another partner/owner might specialize in the financial aspects of the business. The owners need a written agreement that establishes the respective responsibilities and obligations. Who makes the decisions? How are decisions made? And more. Most importantly, the agreement needs to cover the basics on how a partner/owner can exit the business if he or she want to sell and what happens if tragedy happens and a partner is no longer able to meet his or her obligations. It is essential to formalize an ownership agreement up front when the partners/owners are in the best frame of mind. An experienced San Diego corporate attorney is a useful resource in having an agreement drafted that meets the needs of your circumstances.

3. Nondisclosure agreements

Nondisclosure agreements (“NDA”) require all signatories to maintain the confidentiality of various information that is provided or gained with respect to your business. Such NDAs are essential to protecting trade secrets and may be required under various federal and California laws if your business handles certain types of information (such as health care information of patients and customers). NDAs are for everyone who has substantial contact with your business including vendors, owners, employees, potential investors, consultants, and more. NDAs can be — and probably should be — stand-alone contracts, but the operative language can be incorporated into longer documents such as the owner/partnership agreement.

4. Employee agreements

Even for lower-level employees such as a cashier or receptionist, it is useful and advisable to have them sign a basic employment agreement. Nothing complicated is needed other than an acknowledgment that they are “at-will” employees, that they can be terminated at any time for any reason and that, as a condition of their continued employment, they agree to abide by the company policies and procedures. This then binds your employees to your anti-discrimination policies, your anti-harassment policies, your acceptable-use policies, and more. With more senior level employees, longer and more detailed employment agreements are needed, setting out the mutual expectations of the parties.

California Business Contracts: Contact San Diego Corporate Law Today

If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses including contract drafting and review. Mr. Leonard has been named “Best of the Bar” by the San Diego Business Journal for four years running.

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