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By François Laugier, Sarah H. Borrey from RMKB and Eve Chaurand-Fraser
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.
Always make contractors sign an invention assignment and confidentiality agreement.
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).
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.
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.
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!
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.
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.
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.
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.
The information on this site is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your state. This web site is not intended to be advertising under applicable laws and ethical rules. These materials have been prepared by the French American Chamber of Commerce with the expertise of our staff and members for informational purposes only and are not legal advice. Anyone viewing the information should not act upon it without seeking professional counsel. The information contained in this website is provided only as general information which may or may not reflect the most current legal developments.