Business | Legal issues | Employment Contract | Non-Disclosure Agreement | Intellectual Property

Employee Non-Disclosure Agreement

Unilateral Non-Disclosure Agreement

Mutual Non-Disclosure Agreement

Copyright

Patent

Regular employment

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Fixed-term employment

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Class action lawsuit

Shareholders agreement

Most common legal issues a business faces and how to deal with them

Legal issues are part and parcel of running a business. Here are the most common a business faces and how to deal with them.

Legal issues are part and parcel of running a business. It is important to know the most common legal issues your business will likely encounter and how to deal with them should they arise. Here are the most common legal issues faced by a business and how to deal with them in order to mitigate (if not eliminate) any damage to your business.


A.         Legal issues with employees

Employees are every company’s backbone but they can turn into a liability if not managed correctly or if the ground rules of their employment aren’t properly set at the start. With startup companies and small businesses the hiring process is normally informal and the employment relationship is undocumented. However, this is not a recommended practice.

The employees’ rights and responsibilities need to be properly laid out in an employment contract. There are many different types of employment contracts depending on the employee's status (e.g. regular, probationary, fixed-term and project-based) and the correct type of employment contract should be used to minimize issues with them.

The company should also have an internal code of conduct for employees to adhere to. Having a work environment that respects health and safety standards and which complies with government regulations is also a must, especially in light of the COVID-19 pandemic.


B.         Copyright and Patent Issues

While designing and developing your company’s product make sure that your research and development teams thoroughly protect the patents and copyrights over it to avoid pirating from competitors. Intellectual property infringement could lead to loss of business, revenue, reputation and competitive advantage, unless proactive steps are taken to protect intellectual property and deter potential infringers.

Your employees should execute an Employee Non-Disclosure Agreement to protect confidential and proprietary company information. When dealing with third persons (such as potential business partners and consultants) make sure they sign either a Mutual Non-Disclosure Agreement or Unilateral Non-Disclosure Agreement for the same purpose.


C.         Dissatisfied Customers

Dissatisfied customers can file a complaint against your company for damages for any fault in your products, services or claims. This can damage your business and affect your brand’s image and reputation permanently.

Make sure the terms and conditions for using your product include limitations when it comes to litigation against you. A lawyer should review the terms and conditions of your product to include the necessary protections for your business. Examples of these are limitation of liability clauses which effectively limit the amount of damages that may be claimed against your business by a dissatisfied customer. Another example is a venue clause which dictates the place where a complaint against your business must be filed, which is normally the place where the company's principal place of business is located.


D.         Disagreements between shareholders

It may be easy to share the same vision with a friend or colleague when starting a company but once it takes off and starts to get more serious, misunderstandings sometimes arise. This can be due to one of the shareholders wanting a different path for the company or pursuing a different endeavor. No matter how much you trust them, it’s important to start working with a shareholder’s agreement. This will outline the rights and responsibilities of each shareholder and how the company should be run.

There is no guarantee that your business will be free of legal issues but should they arise it’s better to be equipped with the proper business documents and legal advise. Prevention is better than the cure.


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