Contracts, Terms of Use, & Policies
Drafting, Review & Advisement
Business Contracts
Businesses, whatever their shape or size, need certain contracts or agreements. One of these is some sort of agreement among the owners that determines their rights and obligations and the structure and management of their business. These agreements - whether partnership agreements, operating agreements, bylaws, or shareholders' agreements - are discussed in their own respective sections on the ownership agreements page.
Beyond these ownership agreements, contract needs vary considerably from business to business. Depending on the nature of your business, you may need agreements with landlords, insurers, employees, contractors, vendors, suppliers, licensees or licensors.
Maybe, for example, you have employees who have access to sensitive or proprietary company information. Maybe you have certain trade secrets to protect. As a result, you may need an employment agreement or a non-disclosure agreement (NDA) in place.
Or, maybe your business deals in intellectual property like trademarks or copyrights and needs a license agreement to make sure your business is getting what it needs without giving too much in value in return.
Depending on the nature of your business, you may need agreements with landlords, insurers, employees, contractors, vendors, suppliers, licensees or licensors.
Not every business will need contracts for all of these things, but having the right agreement in place when it matters can save your business considerable time and money down the road.
Of course, contracts can be formed with just a handshake and without a written agreement. But these oral agreements, while enforceable, generally have significant issues demonstrating their agreed upon terms. And what seems like an obvious part of the agreement to one party, may not seem obvious at all to an other.
For these reasons, if an agreement is important to your business, you should get it in writing. Your business contracts will make sure not only that you're getting the rights that you need without obliging you or your business unnecessarily, but also that all parties to the agreement have the same understanding.
If your business enters repeatedly into the same or similar agreements, you may want to consider having a contract template instead of a single agreement.
For example, if you license the same or similar works to others over and over again, you may want to have a license template that you can simply fill out with the information specific to the parties in that transaction while retaining all of the important provisions relating to rights, warranties, remedies, etc.
Contract templates can be used for various agreements from NDAs to employment or independent contract agreements, and they can help save considerable time and expense. A word of caution, however, when it comes to independent contract agreements: these agreements require that the contractor meet certain tests or requirements so that they are not classified instead as an employee.
To make matters more complicated, the tests or requirements vary from law to law. For example, the requirements under the federal minimum wage and overtime law are distinct from the requirements under federal tax laws. As a result, the same person may be considered an employee under some laws, but not others.
To learn more about independent contract agreements and the potential for classification as an employee, please see Independent Contractor Agreements: When Actions Speak Louder than Words.
Another important type of contract for many businesses is an insurance contract. Insurance contracts formalize the agreement between you and your insurance provider. These agreements can be for various sorts of insurance coverage and it is important to consider not only the payment and premium, but also precisely what claims for loss are covered and what sort of exclusions are involved. However, often insurance is a good idea even for a limited liability entity particularly if that policy will cover any necessary litigation expenses.
Most businesses should at least consider getting general liability insurance which will help protect your business from losses resulting from property damage, bodily injury, and other harms or damage. Product liability, workers compensation, malpractice, and automobile insurances may also be good choices depending on the activities of your business.
It is important to review any insurance contract carefully and negotiate where necessary to make sure it covers and does not exclude the activities or situations that matter to your business. For more information about business insurance, please see SBA: Get Business Insurance.
Much more could be said about all of the various contracts a business may want or need. If you need assistance drafting, revising or reviewing a contract or a contract template, PLF may be able to help. Please, Reach out, Today!
Terms of Use (Terms and Conditions)
Many startups and small businesses also benefit from the creation of Terms of Use, Terms of Service, Terms and Conditions, or the like to govern the use of their websites, mobile applications (“apps”), or other software or services.
These “Terms” allow businesses to express to users of a site, app, software, or service the conditions under which it is provided to users, allowing users to either accept the provided terms or discontinue use.
Such Terms are governed by the laws that govern contracts generally. This benefits business owners by giving them considerable flexibility with regard to the content and scope of possible conditions.
Creating enforceable Terms is your business's chance to protect itself from some of the risks created by customers, users, or others. And when well-drafted and designed, these Terms can go a long way to protecting business and personal assets.
Colorado courts, for example, have generally been willing to uphold a variety of disclaimers and limitations on liability, mandatory arbitration provisions, forum selection provisions, and choice of law provisions.
The application of contract law means that businesses are required to provide conspicuous notice regarding any applicable Terms and that users must affirmatively accept those Terms.
However, the application of contract law also means that businesses are required to provide conspicuous notice to users regarding any applicable Terms.
It also means that users must affirmatively accept those Terms. The clearest example of affirmative acceptance is an executed document. But in world of websites and mobile apps, acceptance has been held to have come from a variety of user actions, including simply browsing the site or using the app.
Nevertheless, it is certainly preferable to have users more explicitly acknowledge and accept any important conditions.
This turns not only on well-drafted Terms, but also the structure and content of the website or application, including the layout and design. Were Terms hyperlinked or presented to the user? Was the user required to accept the Terms in order to use the site or app?
Answers to these and other questions will likely guide the decision on the enforceability of the Terms with respect to any particular user. For more information about design decisions that affect the enforceability of Terms, please see Creating Enforceable Internet Agreements: Web Design for Proper Notice and Acceptance
The Pote Law Firm works with entrepreneurs and small business owners to help them properly consider these issues and to draft appropriate terms and conditions. If you need assistance drafting or implementing any Terms, PLF may be able to help. Please, Reach out, Today!
Privacy, Security & Company Policies
The policy needs of businesses are almost as varied as their contractual needs, and there are many different kinds of policies that a business may implement. But there are two that nearly every business should have: (i) a data-security (and incident-response) policy, and (ii) a privacy policy.
Regulations governing the collection and use of "personally identifying information"FN1 are popping up all over the place. Many have heard about the EU's General Data Privacy Regulation (GDPR) or the California Consumer Privacy Act (CCPA), but fewer are aware that Colorado also passed its own data security laws in 2018.
Effective as of September 1, 2018, any business - no matter how large or small - that collects personal information (as defined by the statute) on Colorado residents is required to create and implement a security policy regarding the maintenance and disposal of that information.
This data-security policy must detail not only how that personal information is secured, but also what steps will be taken in the event of a security incident or breach. And both the data-security measures and the incident-response procedures must be reasonable, given the size and resources of the business.
Furthermore, the law applies regardless of whether the personal information is stored digitally or physically. That is, even businesses that keep only paper receipts or other physical documents are no less required to comply with the statutory mandate to create and faithfully implement a data-security policy.
Any business that collects personal information... on Colorado residents is required to create and implement a security policy regarding the maintenance and disposal of this information.
As a result, it is increasingly important for startups and small businesses to create and implement data-security and incident-response policies to describe how they will secure that information and respond to any suspected breach.
If you would like to learn more, two articles on this site further explore Colorado data-security law: Colorado Data Privacy Law (2018 Update) and Colorado Data Breach Notification (2018 Update).
Privacy policies are also important for any business with an online presence. Whereas a security policy is generally an internal company document, privacy policies are often required to be presented to be public so as to provide notice to the potential customers of that business as to how the business collects, uses, or shares information from its customers or users.
Various laws now require businesses to conspicuously display certain disclaimers or notices to users of their websites or other services that may collect personal information. For example, you may have noticed the ubiquitous pop-ups and other disclaimers on websites regarding the site’s use of “cookies" - or small bits of data sent from a site to a computer to store preferences and other information related to that computer's use of the site.
As a result of the GDPR, the CCPA, and many other online privacy laws, businesses that collect personal information are required to respect and provide notice of the rights of individuals in certain regions with regard to the use, amendment, and removal of that individual’s information. These laws may also require a business to disclose whether and how its website uses cookies.
Some of these privacy protection laws may not apply to smaller businesses, but it is increasingly important for every business owner to understand the applicable regulations and their own businesses practices with respect to the handling and storage of any personal information, so that they can adopt and maintain privacy policies accordingly.
If you are unsure whether your website or mobile app needs a privacy or cookie policy, please see Top 5 Reasons Why You Need a Solid Privacy Policy.
There are many other polices that your business may need. If you have employees, you should also have policies related to your handling of certain situations with those employees, from disputes and complaints, to promotion or termination. Often these policies are presented in an employee handbook so as to easily provide this information to both new and other employees. Generally this handbook is distinct from any employee contract, but it may still be a good idea to have an employee sign an acknowledgement of policies contained within.
Depending on your business and its goals, you may also wish to have policies related to your purchasing decisions, hiring decisions, environmental impact, stakeholder engagement, employee travel, grievance reporting or community service. If your business is interested in B Corp certification, many of these policies if drafted well will help you improve your chances of qualifying. Even if you're not, they may help boost the reputation of your business, which could attract not only customers, but high-quality employees and investors.
Pote Law Firm follows developments in the areas of data security, privacy, and other areas to assist clients in understanding these regulations and in developing any required policies so as to best protect that particular business.
If you need assistance with a security, privacy, or any other policy, PLF may be able to help. Please, Reach out, Today!
FN1: Not every regulation uses the phrase "personally identifying information" but instead may employ a slight variation. Regardless of the phrase used, the statutes all provide a definition for the operative phrase and there are some important differences amongst these definitions.