The big five, what are they?
Contrary to what you may think, having a written contract doesn’t mean you don’t trust the other party. Rather it to state what each party expects and understands from the contract expressly in writing, so the other party can review it and make sure they are both on the same page. Pronto.
These contracts are basic and very essential and will protect your business from unnecessary liabilities, lawsuits, and embarrassments.
Occupying the top of the list is a co-founders’ agreement (or a shareholders’ agreement). Every company in Nigeria has at least two shareholders or co-founders, upon registering it. Among other things, a co-founders’ agreement spells out remuneration, duties, decision making, succession planning, profit sharing, etc for the co-founders of the company. What happens if they want to sell the company, how much power would each co-founder wield? What happens if a co-founder wants to pull out of the company? Can he sell his shares to anyone he/she chooses? These and many more are stated and black and white, we don’t want disputes between shareholders to mar the smooth running of our business right? Then get a well-drafted co-founders’ agreement.
Another important contract is the employment contract. Your business should have a standard employment contract for its employees. What are the terms of employment? What are the duties of each employee? Will some employees be allotted shares over time, how many shares and on what basis? Is the company’s confidential information, which the employee will be exposed to in the course of working in the company, protected? All these and more are what a standard employment contract spells clearly.
Third on the list is a sales or service contract. What is the company selling? Tangible goods or intangible services? What are the terms of sale, any policy on refunds, can physical goods be returned and on what ground? What service packages are available, what are the details of each package? What is the delivery policy for the goods you produce? Who owns the intellectual property of products of the company? Every company should have a standard sales or service contract for the goods and services that it produces.
A website terms and conditions. The internet has changed the way we do business. Transactions are being concluded online without the parties meeting physically. Almost every company has a website which serves as its online shop, store or office. A website’s terms and conditions state the terms of using your website for business. It is similar to a service or sales contract, the only difference is that it relates to transacting online or using your business website.
Lastly and very important is rent or land purchase agreement. Despite the rise of online businesses, most companies still have a physical address. The property could be rented or bought. Either way, ensure you have the proper documents entitling you to use the property.
Which of these contracts does your company have? To get started with these big 5, click here.