Crowley Law LLC provides emerging life sciences and other technology companies with strategic guidance for designing comprehensive business agreements that facilitate continuous growth and expansion. We believe robust and well-thought-out written agreements are the bedrock of a thriving enterprise.
How Appropriate Written Agreements Can Help Build a Thriving Enterprise
With experience offering full-service representation for life sciences and other technology companies from business formation to marketplace, we have seen successes built upon comprehensive business agreements. Here is why:
- Clear roles and responsibilities
By clearly defining each party’s roles, responsibilities and expectations, an appropriate written agreement reduces ambiguity and averts conflicts. - Protected interests
An appropriate agreement provides frameworks for dispute resolution, intellectual property rights, nondisclosure agreements and termination, helping protect your business and its assets. - Compliance with State and Federal laws
Having an appropriate written agreement will facilitate compliance with relevant State and Federal laws, minimizing the risk of legal issues that could disrupt business operations. - Enhanced Financial Planning
A business agreement details financial considerations, such as profit sharing, remuneration and each party’s financial responsibilities.
Components of a Successful Business Agreement
Crowley Law LLC has helped many business owners draft detailed and thorough agreements for the governance of their entity to ensure smooth operations, minimal conflicts and effective management. We recommend including the following key seven factors in your business agreements generally.
- Responsibilities: The duties of each party spelled out clearly.
- Dispute resolution: An outline of dispute resolution procedures focusing on transparency and fairness.
- Ownership: How ownership or membership interests will be managed upon the joining or exiting of a member or stockholder.
- Distributions: How profits and losses are distributed among members and stockholders.
- Critical developments: Address mergers, buyouts and other corporate events.
- Ownership of Intellectual Property: A Clear statement of ownership of intellectual property by the company.
- Confidentiality/Non-use: Provisions to protect confidential information from disclosure or inappropriate use.
Special Provisions in Business Agreements
Besides the seven main components of a successful agreement, we also advise business owners to consider adding one or more of the special provisions listed below in appropriate cases:
- Restrictive covenants
A clause in a stockholder agreement, employment agreement or vendor agreement designed to prevent actions that may harm business, such as the disclosure of confidential information, solicitation of customers or other employees. This may include post-transaction or employment restrictions on competing activities if those provisions are appropriately limited. - Provisions for Changes in Ownership
Closely-held companies typically include buy-sell provisions in their agreements to address planned or anticipated events (like retirement or death). - Contractual limitations of damages and remedies
Such clauses specify how damages and other remedies will be handled after a breach of contract, helping manage risks and set clear expectations for all parties. Clauses you can consider include limitation of liability, liquidated damages and indemnity clauses.
Business Disputes Within the Company
Disputes are inevitable regardless of the business entity you elect. Our firm can help business owners anticipate conflicts in their business agreements and draft a framework for resolution. Here are the best practices to keep in mind:
- Take time to discuss the issues at hand:
Poor communication is often the cause of many conflicts, especially between founders. When facing a problem, initiate a conversation with the affected party and attempt to resolve the dispute within the terms of your business agreement. - Use a mediator:
A neutral third party may be needed in the case of a complex conflict. A mediator can facilitate an amicable resolution through a lawsuit settlement, a new agreement or even the harmonious exit of a party from the business. - Use an arbitrator:
Based on the terms of your operative agreement, you can elect to engage an arbitrator. This professional will consider the conflicting parties’ views and decide on the appropriate action that is binding on the parties and avoids going to court. - Consider a buyout:
Some disputes may escalate to a point where the business relationship seems untenable. In such situations, you can opt to buy out the party who wishes to leave based on the provisions of your operative agreement or seek the buyout of your interest. - Choose judicial or voluntary dissolution:
Sometimes, the business relationship may be beyond repair and the company can no longer function. In such situations, the viable option would be to proceed with the dissolution process outlined in your governance documents. - Resort to litigation as a last resort
Some conflicts may originate from the misconduct of one or more parties, such as fraudulent activities and misappropriation of assets. Such cases often result in litigation, especially when other conflict resolution processes have failed.
How Crowley Law LLC Can Help
Establishing and adhering to a detailed governance and operational agreement can be challenging. Any slight mishaps or inconsistencies in the agreement can lead to future conflicts and operational problems. Crowley Law LLC can help you develop and implement a business agreement that will avert these issues.
Here are some of the ways we can help you with your partnership, stockholder or operating agreement:
- Helping you identify your key interests and how best to protect them
- Providing legal help and ensuring compliance with laws and regulations
- Creating comprehensive customized agreements suited to your unique needs
- Identifying risks affecting your startup and including mitigations in your business agreement
- Developing clear methods for resolving disputes
- Protecting intellectual property and confidentiality through your agreements
- Ensuring financial and operational clarity by including relevant clauses in your agreements
- Providing ongoing legal support as your startup grows and evolves
FAQs
Should I Handle a Dispute Alone?
As an entrepreneur and a business owner, you can resolve minor disputes on your own. However, we advise seeking legal assistance when the stakes are high or when there is no immediate solution to a disagreement or conflict. Keep in mind that some business agreements include specific dispute resolution methods that you should adhere to.
Are Verbal Agreements Binding?
Yes, verbal agreements are considered legally binding in most States, including Delaware. However, it can be nearly impossible to negotiate a resolution when a conflict or disagreement occurs. Thus, we recommend backing up your verbal agreement with a written contract or any other documentation that provides proof of the terms of the agreement.
