Contract Law

When work is performed or services are provided by an outside party, it is often done under a vendor services agreement. Business owners and individuals in need of services from a third party— whether as a one-time thing or on an ongoing basis — should use a vendor services agreement. With a clear and professionally drafted vendor services agreement in place, your company can dramatically reduce the risk of conflict or confusion. In this article, our top-rated Orlando, FL contract lawyers explain the most important things that you need to include in your vendor agreement for services. The Key Provisions in a Vendor Services Agreement There is tremendous value to having a properly crafted vendor services agreement. Similar to other commercial contracts, a vendor services agreement will control much of the relationship between a company and its outside contractor(s). Not only will a clear and well-constructed vendor services agreement reduce the risk of a dispute, but it will also protect the legal rights and financial interests of your company. A good vendor services agreement should be comprehensive — it should address a wide range of different issues. Some of the key provisions that should be included within a vendor agreement for services include: A Description of Services: First and foremost, a vendor services agreement should provide a clear overview of the nature and scope of the services that are to be offered under the contract. In some cases, a statement of work will be included with the agreement. The more detailed description of the services is, the better — as it is crucial that all parties understand their duties. The Terms for Payment: Certainly, an effective vendor services agreement should have a clear explanation of the terms for payment. Among other things, the contract should address how much will be paid, when it will be paid, and how it will be paid. Often, the vendor is paid partially upfront and partially upon completion of the agreement. Term of the Agreement: How long will the vendor services agreement last? Make sure that you clearly define the term of the relationship. Whether your company is hiring a vendor for a single event or to provide ongoing services, it is essential that the term of the contract is understood by all parties. Limitation of Liability: Many vendor services agreements contain a limited liability clause or an indemnification clause. If you are entering into a vendor services agreement in Central Florida, be sure to carefully review the liability provisions. A lawyer can help you understand if the limitations on liability are fair, reasonable, and in your best interests.  Restrictive Covenants: Depending on the nature of your relationship with the vendor, you may be interested in seeking a restrictive covenant. A common example of this is a non-compete agreement. For a number of different reasons, you may not want to work with a vendor that provides similar services to direct competitors. Notably, under Florida law (Florida Statutes § 542.335), there are very strict regulations regarding restrictive covenants. In order to be legally enforceable, non-compete agreements must be carefully drafted.  Confidentiality Clause: A confidentiality clause is a contract provision that requires parties to refrain from disclosing certain information. Often, vendors receive access to some sensitive internal information. With a non-disclosure provision, parties may be able to make sure that key information is kept strictly confidential. Renewal/Termination Clause: Finally, it is generally recommended that parties address issues of renewal and termination when negotiating a vendor services agreement. If the commercial relationship works well, parties may want an opportunity to ensure that they can keep moving forward with similar contract terms. Of course, there is always the possibility that, for whatever reason, a business relationship with a vendor may simply not work out. To prepare for this scenario, companies want to consider including some type of early termination option within the vendor services agreement. Every commercial agreement is unique. Businesses should reach a vendor services agreement that suits their specific needs. Some provisions may simply not be relevant to your company. For example, your company may have little to no interest in bargaining for a non-compete clause. On the other hand, there are undoubtedly certain issues that will be extremely important to your business. By working with an experienced Orlando, FL contract lawyer, you can be sure that your vendor services agreement will be right for the needs of your company. Get Help From Our Orlando, FL Contract Attorneys Today At BrewerLong, our Florida contract law attorneys have the skills and experience to assist clients with the full range of issues related to vendor service agreements. We work tirelessly to protect the legal rights and commercial interests of our clients. If you or your company needs help negotiating, drafting, reviewing, or litigating a vendor services agreement, we are here to help.  To set up a free, strictly confidential introductory phone call, please do not hesitate to contact our law firm today. With an office in Maitland, we represent companies throughout Central Florida, including in Orlando, Sanford, Deltona, Apopka, Winter Park, and Lake Buena Vista.

Going into business with one or more other people can be exciting, but it can also be a stressful experience when one or more of your partners does not live up to the terms of the partnership agreement. When one or more of the partners fails to abide by the terms of the partnership agreement, this is known as a breach of the agreement, or a breach of contract. In such situations, the remaining partner(s) want to know about options that may be available with a breach of partnership agreement. We want to provide you with more information about partnerships generally and the importance of partnership agreements, and then to provide you with options that may be available to you if one of your partners breaches the partnership agreement. What is a Partnership? The U.S. Small Business Administration (SBA) explains that partnerships are the most basic business structure available to two or more people who want to go into business together. If two or more people decide on a partnership, they have to decide between one of two options: a limited partnership (LP) or a limited liability partnership (LLP). A limited partnership, or LP, is a business structure in which one general partner has unlimited liability while the other partner(s) have limited liability. The general partner with unlimited liability tends to have greater control over the company, while the remaining partners with limited liability often have less control over the company. A limited liability partnership, or LLP, is a business structure in which all partners or owners of the business have limited liability and share generally in control over the business. Limited liability means that you are not responsible for the actions of any of your other partners, and you are not responsible personally for debts associated with the partnership. In both LPs and LLPs, profits are passed through to personal tax returns. What Should Go Into a Partnership Agreement? Whether you have an LP or an LLP should be outlined clearly in a partnership agreement. In addition to clarifying whether you have an LP or LLP, the partnership agreement is also an important tool for handling breaches by one or more of the partners. An article in Forbes explains that the following elements should go into every partnership agreement. While the agreement need not necessarily be in writing, having a written partnership agreement can be extremely helpful: Each partner’s financial contributions; How the partners will split the profits; What will happen if one partner leaves the business or dies; What will happen if you need to close the business; What will happen in the event of bankruptcy; How partners will share in decision-making; How partners will resolve disputes (e.g., mediation, arbitration, lawsuits); Liquidated damages in the event of a partnership breach; and Dissolution of the business. Handling a Breach of the Partnership Agreement Generally speaking, the best scenario for handling a breach of a partnership agreement is if your partnership agreement specifically outlines your options in such a situation. If your partnership agreement requires mediation or arbitration in the event of a dispute, you should speak with a lawyer about moving forward with mediation or arbitration. However, your partnership agreement also could make clear that you are able to file a lawsuit against the other partner for your losses. In addition, your partnership agreement also might make clear whether you can seek liquidated damages and the amount available. If your partnership agreement does not specify what to do in the event of a dispute or a breach, then you may have one of several options available to you with the help of a business lawyer: Expel the partner from the partnership; File a lawsuit against the partner for the breach; Seek liquidated damages from the partner; and/or Negotiate a settlement. The above options need not be mutually exclusive. For example, you may be able to expel the partner from the business and file a lawsuit against that partner. Depending upon the terms of your partnership agreement, you also may be able to seek liquidated damages for actual or anticipated damages in your lawsuit. Contact a Florida Business Lawyer If you need help handling a partnership dispute, you should speak with a Florida business lawyer about your case. Contact BrewerLong today for more information.

Know the Legal Issues Related to These Three Employment-Related Documents Whether you’re getting ready to hire your first employee or you’ve had hundreds of people on your payroll for years, it’s essential that your employment documents work for you rather than against you. That means they need to be clearly written, comprehensive, and compliant with all applicable laws and regulations. There is a long list of documents you’ll use as you recruit, hire, manage, and terminate workers, and they will vary based on your specific industry and needs. But three important employment-related documents apply to virtually every operation: Employee handbook Work-for-hire agreements Restrictive covenants agreements Employee Handbook The employee handbook (sometimes called an employee manual or policy and procedure manual) is the document that establishes the ground rules for how you want people to conduct themselves within their capacity as your employees. Employee handbooks typically cover policies on such issues as: Paid and unpaid time off policies, including holidays, vacation, sick leave, family medical leave and other types of leave. Employee behavior, including attendance, dress code, meal and rest breaks, as well as bans on harassment and discrimination and your general expectations of employee conduct. Social media policy, including whether employees can access social media at work, the use of company information and trademarks on the social media accounts of employees and their family and friends, and how employees should respond to offensive or negative posts about the company made online by others. Compensation, including when and how employees are paid, overtime policies, and pay grade structures. Benefits, including health and other insurance coverage, other benefits you may offer, and eligibility criteria. In addition, there are likely other issues specific to your operation or industry that you may want to cover in your employee handbook. A well-crafted employee handbook eliminates misunderstandings and ambiguity regarding what is acceptable workplace conduct and what is not. It also provides the employer with a legal foundation should disciplinary action, up to and including termination, be necessary. Work-for-Hire Agreements A work-for-hire or work-made-for-hire agreement specifies that whatever materials your employees produce during the course of their work belong to the company. While this most commonly applies to intellectual property and creative endeavors such as writing, design, and photography, it’s a good idea to have every employee sign a work-for-hire agreement stipulating that whatever they produce in their capacity as your employee becomes the company’s property. Restrictive Covenants Agreements It’s important to take appropriate steps to protect your proprietary business information as well as your customer interests and relationships through the use of restrictive covenants agreements. These documents include things that could have a negative impact on your company that employees agree not to do, such as non-compete, non-disclosure, non-solicitation, and non-disparagement. It may not be necessary or appropriate for every employee to sign an agreement covering one or more of these restrictive covenants; that’s a judgment call you must make based on your specific circumstances. Two Most Common Mistakes While the complexities of employment law make creating effective documents a challenge, the two most common mistakes employers make in this area are: Not having employees sign relevant documents. If you go to the effort and expense to create various agreements and other documents, be sure every employee signs the ones appropriate to their job and status. Not understanding what the documents say. Before you ask an employee to sign your documents, take the time to understand exactly what they mean and be sure the terms are enforceable. Get a Document Checkup How long as it been since an attorney has reviewed your employment-related documents? If you don’t remember and if you’re not sure they’ll protect your company in the event of a dispute, take advantage of our Legal Sleep Aid service. I will review up to five of your documents and let you know where the red flags are and what you can do about them. Go here for complete details.

Buy-Sell Agreements go by different names (Shareholders Agreement, Operating Agreement, Partnership Agreement, for example), but they all have a common goal: provide a clear roadmap for the company and owners to deal with changes in ownership, with minimal impact on the operation and value of the business. Bad Buy-Sell Agreements—those that do not minimize the impact of a change in ownership—share one or more of the following three mistakes. Mistake #1: Cookie-cutter terms that just don’t work. It’s a mistake to think that a generic Buy-Sell Agreement is just fine for every company. The terms of a Buy-Sell Agreement must fit the unique characteristics of the company. These unique characteristics may include unequal ownership interests, differing roles in the company, particular family relationships among owners, and industry-specific requirements. Unless the Buy-Sell Agreement takes into account all of the particular aspects of the company and its business, it’s likely that the Buy-Sell Agreement will fail when it is most needed. The Solution: Every Buy-Sell Agreement must be carefully prepared to reflect the unique characteristics of the company and its owners, and it should be regularly reviewed and updated. Mistake #2: Determination of the buy-out price is unreliable. Because Buy-Sell Agreements are about the buying and selling of the company’s ownership interests (stock, membership units, partnership interests, etc.), price matters. If a fixed price set in the Buy-Sell Agreement is too low, then the selling owner (or his or her family) suffers. If a fixed price set in the Buy-Sell Agreement is too high, then the buying owners or the company suffers. For this reason, it’s a mistake for the Buy-Sell Agreement to state a fixed price for the company’s ownership interest, unless the parties are required to update the price regularly. It may be better for the Buy-Sell Agreement to contain a formula to determine the appropriate price, but even a formula can lead to problems if it depends on wrong or outdated presumptions. Because of the problems associated with stating a fixed price or a formula, many Buy-Sell Agreements require an appraisal at the time of a transfer of ownership interests.  An appraisal approach might be better, but it too can suffer from problems, such as failure to specify what facts the appraisal should take into account or gaps in the procedure for determining the price by appraisal. The Solution: Whether a fixed price, formula, or appraisal, the price provision of every Buy-Sell Agreement must accurately reflect the specific nature of the company and it must be flexible and subject to periodic update. Mistake #3: No assurance that cash will be available to pay the buy-out price. Even if a buy-out price is determine appropriately, the buyer—the other owners or the company—must have the ability to pay it. Unless the Buy-Sell Agreement provides specific terms for the timing and source of paying the buy-out price, the buying owners or the company may be legally obligated to pay the whole amount immediately from operating funds. This debt obligation could cripple the company or the remaining owners. The Solution: Every Buy-Sell Agreement should specify the intended source of funds for paying the buy-out price—often including life insurance and disability insurance policies—and a reasonable time period for payment of any unreserved amount. Common Elements of a Good Buy-Sell Agreement Buy-Sell Agreements should be unique documents, reflecting the particular characteristics of the company and its owners, but good Buy-Sell Agreements share most of the following common elements. Good Buy-Sell Agreements: Prohibit transfer of ownership interests except as specifically provided; Deal with the transfer of ownership interests in the following scenarios: voluntary transfer by an owner; involuntary transfer by an owner  (caused by divorce, bankruptcy, or creditor action, etc.); death of an owner; disability of an owner; termination of employment of an owner; and irreconcilable deadlock among owners; Spell out the procedure by which buy-out may occur in each scenario; Describe the method of determining the appropriate buy-out price; Describe the source of funds for payment of the buy-out price (e.g., insurance); Describe payment terms; and Describe what should happen pending buy-out. Most important of all, no Buy-Sell Agreement is a good Buy-Sell Agreement unless it is signed by all of the owners, including persons who become owners after the Buy-Sell Agreement is originally signed. Do you have a good Buy-Sell Agreement? If you’re not absolutely sure, contact BrewerLong to have your Buy-Sell Agreement reviewed by an experienced small business attorney.

Unless you’re a sole proprietor, you need an Owners Agreement to guide your company through daily operations and special situations. Unless You’re Microsoft, You Need an Owners Agreement. Having an Owners Agreement is important for every non-public company with more than one owner. Owners Agreements go by different names—Shareholders Agreement or Buy-Sell Agreement for a corporation, Operating Agreement for an LLC, Partnership Agreement for a partnership.  Whatever it’s called, it’s essential. “We Already Have Bylaws.” Great, but they are not the same thing.  Bylaws deal with the internal management of a corporation and the relationship between shareholders, directors, and officers. Owners Agreements have a different focus: the relationship among shareholders.  The Owners Agreement is much more important for a non-public corporation.  LLCs and partnerships don’t even have bylaws. Protection From Unknown Unknowns. What happens to the business when personal tragedy strikes one of its owners?  Personal liability, bankruptcy, divorce, disability, death—any one of these events in the life of an actively involved owner can cripple the business unless precautions are taken in advance.  Those precautions belong in an Owners Agreement. Know Your Partners. You trust your business partners, but how about their creditors or ex-spouses?  An Owners Agreement is needed to ensure that the ownership interests (stock, membership units, partnership interests, whatever they’re called) do not wind up in the wrong hands. Deadlock! You and your business partners are reasonable people, but sooner or later even reasonable people disagree.  This isn’t a problem for the U.S. government or large corporations where the voting process (usually) ensures a winner, but what if there are only two owners of the company (or four, six or eight, etc.)?  The Owners Agreement can include more creative solutions to deal with deadlocks. Competition—Good for the Market, Bad for your Business. Having put time and resources into building the business, the last thing you want is for your business partner to compete against the business.  On the other hand, you might not care if your business partner has a side business. What’s allowed and what’s not in the way of extracurricular business activities should be addressed in the Owners Agreement. Like Old Fish. If an employee-owner quits or is fired, the last thing anyone needs is for her to hang around.  If she keeps her ownership interest in the company, that’s exactly what can happen.  The Owners Agreement should require a buy-out. Not the Time for Haggling. The Owners Agreement should address the purchase price and payment terms for the buy-out of an owner’s interest, whatever the triggering event.  Unless you keep loads of cash lying around—“just in case”—you or your business might suffer from an unexpected obligation (or opportunity) to cash out an owner.  By the way, how much is that ownership interest worth anyway? Bells and Whistles. Sometimes the cookie-cutter, default rules of a corporation are just fine, but often you and your business partners want things your way.  LLCs or partnerships are especially flexible and allow customization.  All this customization must be provided in the Owners Agreement. They Grow Up So Fast. As your company grows, your Owners Agreement may not fit so well (like my children’s clothes).  Every few years, it’s important to review and update the Owners Agreement to make sure that it continues to fit your company. Get Help With Your Owners Agreement As with any legal document, it’s a good idea to consult with a business attorney to draft your Owners Agreement. Contact BrewerLong today.