​We regularly try to remind business owners and nonprofit directors that they should not do business on a
handshake. Too many problems creep up when the terms of the deal aren’t documented in writing,
especially as time goes on. But a recent case involving text messages illustrates not only when a written
conversation might serve as a binding contract but when the terms of that communication might also be
construed as a personal guarantee by the person sending the message.

​It’s not unusual for nonprofit organizations to partner or collaborate with other organizations to accomplish a mutual purpose. Often, our nonprofit clients prefer to document these relationships with an MOU or Memorandum of Understanding. But just what is an MOU, and how is it different from a contract?

If you’ve worked hard to build your client or customer base, or even put significant time and effort into training your employees or recruiting the right subcontractors, you probably want to protect that investment. Non-solicitation agreements are typically used by businesses of all sizes to ensure that their employees and subcontractors will not solicit (or run off with) the company’s customers, clients, or even other employees or contractors that the company has worked so hard to find and develop in the first place. ​

If your business has a web presence (and in the 21st century, you really should), then you probably need a privacy policy on your website. Several relatively recent laws require business websites to post a privacy policy, but these laws aren’t universal in their applicability, especially when it comes to small businesses. Complicating matters, this area of the law is developing and changing rapidly.

According to a recent survey, customers are not only starting to care about their online privacy, but they are also willing to take action to protect their privacy, even going so far as to switch businesses or service providers because of their privacy policies. This means your customers are increasingly likely to want to know what data they are giving up when they interact with your business and what your business is doing with all that data in the first place. In this post, we’ll talk about the legal requirements for your website privacy policy: What should be included in your privacy policy? What are some best practices for keeping your privacy policy up to date?
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You’ve put together your website or app offering your Great New Service™, but now you’re trying to figure out the dreaded Terms of Service. Everyone clicks the box to indicate they agree before signing up for the service, but no one really reads these absurdly long agreements. What do you really need to put in your small business’s terms of service, and, perhaps more importantly, why do you need one in the first place?

Just like you shouldn’t do business on a handshake, you shouldn’t operate your business on a handshake either. But too many entrepreneurs regularly go into business without any formal documentation. If you have business partners, so-called “silent” investors, or took money from friends and family, I cannot stress enough how important it is to have the terms of these partnerships documented in a formal written agreement. Otherwise, it’s just a dispute waiting to happen.

If I had a dollar for every time a client or prospective client told me that their business partner/best friend/family member would never sue them, I’d be writing this article from a beach in the Caribbean right now.

​There are a few critical questions that every company operating agreement* should answer.

​A licensing agreement is a contract in which you, the licensor, gives someone else, the licensee, permission to do something that they otherwise would not have the right to do. There are many situations in which a small business might use a licensing agreement:

• If your business is only reaching customers in a particular region, you might enter into a licensing agreement with another business to sell your products or services in a different region. 
• If your business develops software, you are typically giving end users permission to use the software in a particular way, but you are not selling the underlying code that makes up the software. (This is also true of businesses that operate under a software as a service or SaaS business model.)
• If you create content for others, you have to decide whether you are giving up all of your rights in that content, or simply giving your client permission to use that content (in which case, you retain the right to re-use that content with another client).
• If your business has a proprietary process or patent rights in a particular technology, you might monetize that confidential information by giving another business the right to use that confidential information.
• If you franchise your business or offer a business opportunity, you are licensing your brand for someone else to use.

​While licensing agreements need to be customized to fit your particular business situation, there are some common terms that most licensing agreements should address.

​You’ve been diligently pursuing your marketing plan, and your dream client is finally interested in working with your business. You take some time to hammer out the details, maybe trading multiple emails and phone calls, sometimes even text messages. At some point, the haggling concludes and you get to work providing your service. At this point, one of two things often happen:

​If you’ve ever found your business in one of these situations, you’re definitely not alone. These situations illustrate exactly why you need to use written contracts in your business and not just rely on a handshake and a few emails. 

Contracts are everywhere in business. From online click-through agreements to the service contracts you use with your clients and customers, contracts are simply part of doing business in the modern world. And in this day and age where information is quite literally at our fingertips and just a Google search away, it’s all too easy to throw an agreement together or borrow a sample from an internet website.

But contracts are like the rules to a game. A game of Uno will almost certainly end in a fight if half the players aren’t aware of the unwritten “house rules,” if sections of the rule book are missing, or if the rules say one thing but the drafter meant something completely different. The rules need to be clear and unambiguous from the start, and they need to address as many “what-ifs” as possible.

Here are 5 red flags to watch for before signing any business contract.