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No
collaboration without contract
Never
collaborate with anyone or hire an independent contractor without
a written contract (no matter how rudimentary). Be sure to
describe in detail the deliverables and tie payments directly to
deliverables, not according to a timeline. The last thing you want
is for a deliverable to slip, but you’re still locked into paying
for it in
February.
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Make sure you own the IP
Always make contractors sign an
invention assignment and confidentiality agreement.
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Know
who you’re dealing with
Is that software engineer from a
company? An independent contractor? Where is he/she based? It
could make a big difference in the sad event of a legal dispute
(see # 5).
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On
whose behalf?
When signing a contract, make sure
it is clear that you are doing so on behalf of your business
entity, not in your own name. And the same goes for the other
party.
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Protect your IP
Make sure that your most
fundamental IP development is performed by someone upon whom you
can enforce a contract. Know that it can be extremely difficult
and/or costly (if at all possible) to enforce a contract if that
person is located overseas.
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Always
read every word of a contract
We’ve all done it – just signed a
contract without bothering to read any of it, let alone the small
print. But don’t! Always always read a contract - whether you have
a lawyer or not - and do not sign anything you don’t fully
understand. “I didn’t read it” or “I didn’t understand it” will
almost never protect you. Here’s a handy tip: if you receive
contracts that are overwhelming, try returning them and asking for
a two-page agreement. You’ll be surprised how often this works,
even with large companies. It has also been known for companies to
sneak onerous provisions into seemingly standard agreements like
NDAs. You have been warned!
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Make
sure every contract has an “out” clause
No matter how excited you are about that new
client, you never know when you might want out, so you should
always be able to terminate the contract under terms that are
acceptable to you. A termination for convenience (with notice) is
the ideal provision.
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Actuals, not percentages
Never promise a percentage of your company’s
capital, or there will almost always be ambiguity over the number
of shares that serve as the basis for the percentage. If and when
your company becomes successful, that ambiguity could result in a
costly dispute. Always commit to a number of shares, not a
percentage.
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Missing appendix
Make sure you have negotiated the
“schedules” or “appendices” to a contract before you sign it. Too
many times, contracts get signed with their essential terms
missing, as the contract refers to terms contained in schedules or
appendices that are nowhere to be found.
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Going
global
If you’re not quite ready for a physical
presence overseas, you can at least make a start by registering
trademarks, patents and copyrights in your target foreign
locations.
Start
your business