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Questions Every Business Owner Should Ask

QUESTIONS EVERY BUSINESS OWNER SHOULD ASK

The majority of entrepreneurs enjoy creating businesses based on their hobbies or interests. However, because business owners are not legal experts, start-up legalities may be annoying and perplexing. Corporate compliance, intellectual property laws, taxes, rules, and corporate liability are just a few legal issues that will arise as the company grows.

Of course, it’s best to consult a lawyer about your company’s needs, but knowing what to discuss helps.

Here are 8 conversation-starting questions which may be vital for your business’s growth and success.

1.  Why Is It Essential To Keep Business Records?

Small businesses must keep all tax receipts and paperwork. Depending on your business, some contracts may limit your liability if you are sued. Some of the other paperwork your company generates may be useful in the future because it demonstrates how well it is growing. So, talk to your lawyer about what company records to keep. Keeping accurate records from the beginning is easier than searching for them later.

2.  What Are My Risks of Getting Sued As A Small Business Owner?

Some businesses are more likely to be sued (for example, running a skydiving business will be riskier than working as a freelance blogger). A lawsuit could be filed for a variety of reasons. For example, contract disputes are a common source of business liability.

To determine your chances of being sued, you should learn how you could be held legally and financially liable. These risks should then be reduced or eliminated. You should consult a lawyer about these liabilities unless you have legal training.

3.  Can I Use Personal Assets In Running My Business?

Many small business owners do not draw a line between what is personal and what is business. Your business is a mix of your passions, hobbies, and profession.

Keeping business and personal assets separate is difficult but necessary. Even seemingly simple behaviours, like buying office supplies with your credit card, might threaten your assets. If you consider your personal and corporate identities being the same, why wouldn’t a creditor or court?

4.  How Do I Find Investors?

Investors may be interested in your company if it has growth potential. Investors provide small businesses with capital, connections, and information. Accepting investors is not something to be taken lightly. You must understand how the rules for receiving money will affect your business and your freedom as a business owner.

5.  What Qualities Make A Company Attractive To Work For?

Most workers want more than just a good wage and job security. Employees do better when they are provided freedom and respect space. An excellent dynamic employer-employee relationship starts with good leadership. Work with your lawyer to establish best practices before recruiting new team members. This involves clear HR regulations, the necessary paperwork (independent contractor and employment agreements, non-disclosure agreements, termination letters, etc.), and following up with each employee.

6.  How Can I Protect My Brand?

Your company’s reputation is its most precious asset, regardless of industry. Protect your brand from competitors and copycats. A lawyer can register your company’s brand name, logo, and other identifiers. They can aid with brand infringements.

7.  How Do I Ensure That My Business Is Compliant?

Every company must follow the rules and regulations of the country. If you break these laws, you could face fines, penalties, company liability, and personal liability. How do you know which laws affect your business? Without experience, it’s hard to tell if you’ve overlooked a law or rule. The regulations that apply to your business depend on the business entity you chose, where you formed it, and where you do business. If you want to ensure that your company is compliant, consult your lawyer.

 8.  How Do I Make Plans for My Family?

Many small business owners hope to transfer their company or its assets to their family eventually. However, depending on the structure of your business (and your family), this may not be as simple as you believe. A lawyer with experience in estate planning can assist you in ensuring the security and transferability of your business to your family.

Every business is different, and as such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of running your own company.

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Contract Review Made Simple

CONTRACT REVIEW MADE SIMPLE

What is the first thing you do when someone hands you a contract?

Anxious business owners who want to get the deal done may quickly flip through and scan the contract before signing it. Likewise, the more cautious business owners might want to read the contract before committing. But the thought of plugging through the agreement may be too daunting, so they shove it to the bottom of their work pile to read later.

Before committing, more cautious business owners might wish to read the contract. However, ploughing through the agreement may be too daunting, so they push it to the bottom of their work pile to read later. Does this sound familiar to you? You may have done one of these things as a business owner at some point.

Regarding contracts, it is always better to be safe than sorry. Therefore, reading through a contract before signing is essential to understand what you are agreeing to.

By signing a contract without reading, you have essentially agreed to all of the terms and conditions listed in the contract without any understanding. This can be a risky move, as you may not be aware of all of the potential consequences of signing the contract. In addition, if you encounter any problems or issues after signing a contract, it can be not easy to get out of the agreement. So, before you sign anything, be sure to read through it carefully.

Have you ever wondered how lawyers can review the lengthiest contracts at lightning speed?

Well, it’s no secret in our industry that we routinely use checklists when reviewing contracts. In our experience, checklists are essential when reviewing contracts for the first time, as it can be easy to overlook critical items. Using a list, we can ensure that no detail is missed.

You, too, can review your contract in 10 minutes.

 

5 Tips to Review Your Contract

  1. Note the specific requirements in the contract.
  2. Compare the requirements in the contract to the project specifications.
  3. Ensure that all the required information is included in the contract, such as contact information, payment terms, and delivery dates.
  4. Review the contract’s terms and conditions, and ensure they are acceptable.
  5. Ask any questions about the contract, and ensure your queries are answered.

What To Look for During a Contract Review

Contracts can be tricky, and crocodiles are always lurking in the dark. You need to know where to look for these crocodiles. Here are some places where you can find crocodiles during a contract review.

 

1.  Key Clauses & Terms

Confidentiality clauses protect sensitive company information, indemnification clauses protect the company from being held liable for any damages or legal costs, and termination clauses outline the conditions under which the contract can be ended. Dispute resolution clauses specify how any disputes will be resolved. Such clauses are all critical sections in an agreement and should be given extra attention to ensure the wordings are acceptable.

 

2.  Termination & Renewal Terms

Key clauses to look for include automatic renewal language and opt-out windows. Automatic renewals clauses usually mean that the contract will generally renew automatically at the end of the current term. While the clause usually allows for cancellation within a set notice period, many business owners forget to cancel before the deadline. They are then stuck in a contract they no longer want or need.

 

3.  Clear, Unambiguous Language

One issue that often arises when reviewing a contract is ambiguous language. This is when the wording of a sentence is unclear. This can lead to different interpretations by the parties involved. Vague or unclear terms can lead to conflict. It is, therefore, best to revise the wordings to be more precise, if possible.

 

4.  Default Terms

Default clauses set out the terms which would apply where one party fails to meet their obligations. Knowing the potential consequences can help prevent unpleasant surprises down the road.

When reviewing a contract, it is essential to remember to focus on your top 5 concerns and to be on the lookout for any potential crocodiles hidden in the agreement. By using this simple 10-minute review system, you can ensure that your contract will enforce your business deal and protect your interests.

Having difficulties reviewing your contract? We offer video consultation via Lawyer Anywhere so that you can get the help you need. Contact us today to get started.

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Have You Gone For a Legal Check-Up?

HAVE YOU GONE FOR A LEGAL CHECK-UP?

Have you ever missed your annual medical check-up? Have you ever forgotten to send your car for servicing? You need to know that your business is no different if you are a business owner.  A routine check-up can help you identify potential legal issues and risks your business may face. It can also help you ensure that your company complies with the laws.

A Business Legal Check-Up is a vital resource often under-used in the commercial world. This service is a comprehensive review of a business’s legal situation.  It can help business owners assess their current legal standing and identify potential legal issues that could impact their business. By taking a Business Legal Check-Up, business owners can save time and money in the long run.

When was the last time you did a Business Legal Check-Up?

1.  Who Needs A Business Legal Check-Up?

Regardless of age and gender, ever should benefit from routine medical check-ups. In the same way, every business needs to undergo a Business Legal Check-Up now and then. Every business owner should know whether or not their business operations comply with the law. All businesses, whether public or private, are subject to certain specific regulatory requirements which must be complied with. Though private companies are not required to meet the same high standards as public companies, they still must abide by the law.

Small and medium enterprises often lack access to legal counsel, which puts them at a disadvantage compared to giant corporations. This is because most small business owners are focused on increasing sales and reducing overheads and are reluctant to incur expenditure on risk management or regulatory compliance. However, small business owners may not realise that neglecting the legal aspects of operating a business puts them in a vulnerable position.

 

2.  Why Do You Need A Business Legal Check-Up?

No business is immune from legal trouble; even the smallest businesses can be sued if they aren’t adequately protected.

There are many things to think about when starting a business, from the initial planning stages to the day-to-day tasks of running the business. It’s easy to overlook some crucial aspects of running a business, especially regarding the legal aspects.

A business legal check-up can help identify potential legal issues and help you take the necessary steps to protect your business. One of the most important things to do when starting a business is to ensure you are organised and protected legally. This means taking the time to review business law’s basics and ensuring you have the necessary documentation. Things like a business licence, articles of incorporation, and bylaws can help protect your business from legal trouble.

Furthermore, a Business Legal Check-Up allows you to identify the strengths and weaknesses of your contracts, regulatory compliance, and other legal issues affecting your business. That’s why it’s critical to have a Business Legal Check-Up on a regular basis to ensure you’re on track and compliant with the law.

 

3.  How Often Should You Have A Business Legal Check-Up?

There’s no one-size-fits-all answer to how often you should have a Business Legal Check-Up.  The answer to this question depends on several factors, including the size of your business, the sector you operate in and the type of legal issues you might be exposed to.

For example, a small business operating in a low-risk industry, such as a retail store, might only need a legal check-up once or every other year. However, a company that operates in a high-risk industry, such as the financial industry, might need a legal check-up once every quarter.

No matter how small your business is, it would help if you always had a Business Legal Check-Up at least once a year. This is to ensure that your business complies with all laws. Larger companies should have a legal check-up at least every 6 months. This is because the laws are constantly changing, and ensuring that your business is up to date is essential. If you are not sure what laws apply to your business, you should consult with a lawyer. They can help you stay in compliance and avoid any costly fines or penalties.

 

4.  How Does A Business Legal Check-Up Work?

During a Business Legal Check-Up, your lawyer will usually review the following critical issues in your business:

  • Corporate Records, Filings & Registrations – ensuring that your business is registered correctly and all corporate records are up to date and accurate;
  • Relationships Among The Business Owners – reviewing the ownership and management structure of the business and identifying any potential issues or conflicts;
  • Relationships With Its Employees – reviewing the terms of employment and any relevant policies or contracts;
  • Contracts Used By The Business – ensuring that all key contracts are in order and that there are no potential legal issues;
  • Intellectual Property Created Or Owned By The Business – reviewing all intellectual property owned by the company and taking steps to protect it. To keep business ideas and innovations safe and to prevent others from stealing them, it is essential to have a plan in place for dealing with any potential infringements or unauthorised use; and
  • Insurance And Risk Management – review insurance policies to ensure that the business is protected from financial losses in the event of property damage, liability, or other unexpected events.

After thoroughly examining such documents, your lawyer will usually deliver a report describing their findings and recommendations. From the report, you will learn of problems that require immediate attention and those that will benefit your business in the long run. Your lawyer may also recommend that you update your contracts and agreements to reflect the current state of your business. Additionally, they may suggest changes to your documentary processes to make them more efficient and cost-effective.

 

5.  What To Do If You Find A Problem?

As a business owner, it is essential to keep your business legal. This means having regular check-ups to ensure that everything is in order. If you find a problem, it is vital to address it as soon as possible. This could mean hiring a lawyer to help you fix the problem or taking steps to come into compliance. Ignoring a legal issue could lead to severe consequences for your business.

A Business Legal Check-Up is an integral part of maintaining the security and longevity of your business.   It will help you become familiar with business law’s basics and the rules and regulations involved. A Business Legal Check-Up can help identify potential risks and liabilities and provide a roadmap to avoid or mitigate any legal issues.

By consulting with an experienced lawyer, you can help ensure that your business is on the right track and that you are fully protected against any legal challenges that may come your way.

Want to get a Business Legal Check-up? Skip the hassle of waiting to make an appointment with a lawyer. Speak to us over video consultation via Lawyer Anywhere.

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Shareholders’ Agreement – What’s In It For Me?

SHAREHOLDERS’ AGREEMENT – WHAT’S IN IT FOR ME?

Singapore’s Small & Medium Enterprises (SMEs) account for more than 97% of businesses in Singapore. The absence of Shareholders’ Agreements among SMEs is a huge stumbling block that often results in costly and time-sapping disputes between the business owners and, if unresolved, may lead to the eventual breakup of a thriving business. The lack of a Shareholders’ Agreements also hinders the growth of companies as investors shun uncertainty.

What Is A Shareholders’ Agreement?

A Shareholders’ Agreement is an agreement between the shareholders of a company.

The Shareholders’ Agreements are crucial because it helps define the relationship between the shareholders and helps to ensure that everyone is on the same page regarding the running of the company.

This document can also help clarify how decisions are made and how shares in the company must be dealt with.

If you are a shareholder in a company, it is crucial to have a Shareholders’ Agreements in place.

 

Benefits Of A Shareholders’ Agreement

For the benefits they provide, the Shareholders’ Agreements is an extraordinarily cheap and yet effective way to minimise disputes between owners. The common uses of a Shareholders Agreement include:

 

1.  Provision of Clear Structure – When starting a company, it is essential to have a clear structure. This can be done through a Shareholders’ Agreement. This document would outline the structure of the company, how it is financed, who are the members of the Board, how the company is to be managed, and any other relevant details. A Shareholders’ Agreements can help prevent shareholder disagreements and ensure that the company runs smoothly.

 

2.  Minimising Uncertainty – For any business with multiple shareholders, a Shareholders’ Agreement can help minimise the uncertainty that can come with the death, disability or retirement of a shareholder. A properly drafted Shareholders’ Agreement would provide a proper mechanism for transferring shares in the business. This helps keep the company running smoothly.

 

3.  Confidentiality – Shareholders may have different business interests, some being more active than others in the company. Confidentiality clauses in Shareholders’ Agreements help protect the company from releasing commercial information to competitors or other outsiders.

 

4.  Investor Relationship – When a company is looking for funding, it often turns to venture capitalists. These investors are willing to put up money in exchange for a piece of the company. The Shareholders’ Agreement, in such cases, spells out the rights and responsibilities of each party, including those of the management team and the investors. One of the primary purposes of these provisions is to ensure that the rights of the venture capitalists are protected. If things don’t go as planned, the investors can vote to remove the management team, sell the company, or take any other action they deem necessary. Having Shareholders’ Agreements in place, the investors and the management team can rest assured that their interests are being looked out for.

If you are considering starting a business with someone, you must have a Shareholders’ Agreement. This will protect you, your business, and your interests should anything go along the way. It is also essential to keep the agreement updated as your business grows and changes, as this will ensure that it continues to reflect your relationship with your co-shareholders accurately.

Need help drafting your Shareholders’ Agreement? We offer video consultation via Lawyer Anywhere so that you can get the help you need. We can walk you through the process and answer any questions you may have. Contact us today to get started.

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Drop-Shipping : Is It Legal?

DROP-SHIPPING : IS IT LEGAL?

Is drop-shipping legal? The simple answer is YES.

Drop-shipping is a legitimate business model many entrepreneurs have used to build successful eCommerce stores. However, there are some legal requirements and considerations you need to know before launching your website.

 

WHAT IS DROP-SHIPPING?

Drop-shipping is an arrangement whereby a supplier agrees to sell goods to a retailer, who sells the goods to customers. The retailer does not take possession of the goods but acts as an intermediary between the supplier and the customer. This type of arrangement is not specifically addressed by any law but is governed by general principles of contract law, agency law, and logistics.

A contract or agreement binds the supplier and the seller in a typical drop-shipping arrangement. Many major eCommerce platforms, such as AliExpress, Amazon, eBay, and others, have recognised and allowed drop-shipping, but with strict terms and conditions that the seller must follow. For example, Amazon does not allow a drop-shipping seller to sell items from suppliers like Amazon itself or suppliers already selling on the platform.

Singapore has no specific regulations or laws governing the drop-shipping industry, and this freedom and discretion allow sellers and suppliers to regulate their relationships as they see fit. While this lack of regulation may seem chaotic, it allows for a great deal of creativity and innovation within the industry.

 

KEY CLAUSES FOR DROP-SHIPPING CONTRACTS

When working with a drop-shipping supplier, you’ll need to pay attention to the following 3 key clauses.

1.  Delivery – You must be clear about the delivery terms. This means that you will need to agree on the delivery date and time, and you will also need to agree on who will be responsible for the delivery costs.

2.  Payment Terms – You must agree on the payment terms. This means you must agree on when and how the supplier will pay for the goods they provide.

3.  Refund and Cancellations – You must agree to the return policy. This means that you will need to agree on what will happen if the delivered goods are not as described or if they are damaged.

Like any other business, drop-shipping businesses are also susceptible to legal risks if they do not take the proper precautions. 

To reduce legal risk, you should take note of the following steps to protect yourself from legal liabilities:-

A.  Obtain A Business Licence

This goes a long way regarding taxation on your products and profits and limits your liability if an issue arises. In addition, it helps improve the legitimacy of your store in the eyes of consumers and suppliers.

B.  Create Documents That Outline Your Business Practices

This includes having a refund policy, outlining your legal agreements, website terms and conditions, privacy policy, and any product and practice disclaimers you may require.

C.  Follow Ethical ‘Best Practices’ In Marketing

Utilise eCommerce and social media platforms without manipulating the rules. Don’t be deceptive in your advertising; follow all email marketing rules and regulations.

D.  Sell Safe And Appropriate Products

Work with reputable drop-shipping suppliers. Only sell genuine products which you are authorized to do so, particularly those trademarked or branded.

Despite what some YouTube experts assert, drop-shipping is not a get-rich-quick scheme. Because of the low entry hurdles in drop-shipping, the market can be very competitive. You should do your homework before starting a drop-shipping business. An effective company strategy must include securing your earnings when purchasing and selling goods or services in/from other countries.

Every business is different. As such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of starting and running your own company.

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“Don’t Worry, It’s A Standard Contract”

DON’T WORRY, IT’S A STANDARD CONTRACT

Recently, after having found the perfect premises for our new office, we were given a thick set of documents (the Tenancy Agreement together with all the “standard” terms and conditions) and were told, “Can you please sign here, here and here?”

As lawyers, it was an occupational hazard that we just had to go through all the documents and the small fine print.

Given that it was late in the afternoon, the estate agent seemed anxious to “seal the deal” and said, “Don’t worry, this is a standard contract. All the tenants sign the same documents.” we smiled and continued reading…

Question to ask yourself: “How often have we “signed” documents without knowing the terms and conditions?”

If your reply is, “This doesn’t apply to me. I don’t sign agreements often, “would you be surprised to know that the average person signs around 12 agreements daily? This includes everything from contracts with your mobile service provider to membership forms for the gym. So, if you think you don’t sign agreements often, you will be surprised to know that most of us, signing agreements without knowing that we have done so, probably happens daily.

The term “signing documents” includes the apparent act of having your physical signature imprinted on a written document. It also includes situations when you click on the “I AGREE” or “I ACCEPT” box.

 

What are the implications of your actions?

When you sign a document, you legally agree to the terms within. By clicking on an “I AGREE” or “I ACCEPT” box, you legally agree to the terms. By doing either, you are giving up some legal rights. For example, if you sign a contract and then change your mind, you may be unable to get out of the contract without facing legal ramifications. Similarly, if you click on an “I AGREE” or “I ACCEPT” box, you agree that you have read and understood the terms and that you are legally bound to them.

 

“But that’s not fair!”

 

Unfortunate, but true!

Is there any way out of it?

Contracts are legally binding agreements between parties. There are some situations where a contract may not be enforceable even if it was signed.

 

The following are some of the everyday situations in which a contract may not be enforceable:-

  • Illegal Contracts – An illegal contract is prohibited by law.
  • Unconscionable Contracts – The contract is so unfair that it would be against public policy to enforce it.
  • Exclusion Clauses – Exclusion clauses can render a contract unenforceable if they are unreasonable. Exclusion clauses seek to absolve one party of all or part of their responsibilities and are generally considered unfair by courts.
  • Induced Contracts – Induced contracts are not typically enforceable in court. One party may have been coerced or misled into entering the agreement. The most common example of an induced contract is based on misrepresentation.

So what should we do? Well, it’s probably okay to let it go for minor matters. However, for more significant transactions, it is crucial to read and understand all the terms and conditions you agree to.  By reading the agreement, you might find some onerous clauses slipped into the “standard” agreement. In such situations, you may wish to negotiate with the other party to delete or amend the particular clause.

BASIC ACTION TIPS

  • Read the whole agreement – every clause in the agreement.
  • Do you understand what you are reading? If not, ask someone.
  • Is the clause acceptable to you? If not, try to get it deleted or amended.
  • If you don’t understand or the other party refuses to delete or amend the clause, don’t sign the agreement. Get proper advice before signing.

Speak with us over video consultation via Lawyer Anywhere for any help in reviewing a “standard contract”.

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5 Secrets to Buying a Business

5 SECRETS TO BUYING A BUSINESS

When looking to buy a business, you must know what you’re getting into. Buying a business is exciting, but it can also be a minefield without the right advice. That’s why we’ve put together this list of 5 secrets to buying a business.

1.  Buy What You Know

It’s always best to “Buy What You Know”. This does not mean you need to know every single detail about the business. At the very least, you should understand the principles of the business you are buying. The best place to start is to look at an industry you are familiar with and understand. Next, make sure the business you’re interested in is something you’re capable of running. Finally, don’t forget to factor in your skillset and experience – you don’t want to jump into a business that’s too challenging for you.

 

2.  Do Your Homework

Starting a business can be a gratifying experience, but you must be upfront and honest with yourself; you’ve got a lot of homework! A few things to consider before purchasing: What is the business worth? What are the current financials? What is the company’s history? What are the potential risks and rewards? How well do you know the industry? How much money do you have to invest? Representations made by the seller may not always be accurate, so you must verify those details on your own. Check the facts before you buy.

 

3.  Get Your Finances Ready

When you’re ready to buy a business, it’s essential to have your finances in order. Unfortunately, many people mistakenly believe that the business is the only asset they need to worry about. The reality is that the business is just one piece of the puzzle.

If you’re looking to buy a business, it’s essential to make sure you’re financially ready. Financing a business can be tricky, so start by getting your finances in order. Calculate how much money you’ll need to cover the purchase price and monthly expenses, and save as much as possible.

When it comes to financing your business, you can take out a loan from a bank. You may also want to consider less traditional sources of finance, such as angel investors or venture capitalists. Friends, family, and fools may be potential sources of capital. These sources should be approached cautiously, as they may have ulterior motives or be unaware of the full extent of the investment.

 

4.  Seek Professional Help

If you are ready to buy the business, make sure you have your “acquisition team” – your banker, accountant, and lawyer – to help you. Your acquisition team is an absolute must to assist you in completing the necessary checks and verification. Once these checks and verification have been carried out, you will know precisely what you are buying and from whom you are buying.

 

5.  Negotiate & Bargain

When buying a business, one must be aware of the dangers involved. The critical consideration is to figure out what the business is worth. It is essential to get a reasonable business valuation when considering buying it. Still, you should also be aware of the potential dangers involved in doing so. Always figure out what the business is worth, and do not rely solely on the books of account to give you an accurate picture.

FINAL TIP: Always remember, if something doesn’t smell right, no matter how many months you’ve put into the process or how much you want the business, you should not go through with the deal. If everything goes well, your lawyer can help you finalize and sign the sale agreement; the company is legally yours at that point.

Are you looking to buy a business? We offer video consultation via Lawyer Anywhere so that you can get the help you need.  We will walk you through the process and answer any questions you may have. Contact us today to get started.

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MOU & What They Achieve

MOU & WHAT THEY ACHIEVE

Hey, What Happened? Didn’t We Sign the Memorandum of Understanding (MOU)?

You eventually “ink” a contract with your business partner after many months of doing your due diligence and having engaged in rigorous negotiation. You are sitting in your favourite coffee shop enjoying a cup of latte while daydreaming about the brand-new Ferrari that you are going to be able to buy now that your company is thriving. Suddenly, you get an email that says the deal is off, and so, your fantasy of a lovely Ferrari dissipates as quickly as the coffee in your cup.

Your first thought is, “How can they do that? We have signed the MOU!” You have obeyed the cardinal “Getting It In Writing” rule and assumed that the deal is sealed. Can you still be left high and dry by the dishonourable reneging party with no legal recourse?

Very often in the business world, legalistic sounding papers like “MOU” and “letter of intent” (LOI) are bandied about. But are these documents worth the paper they are printed on? What are the consequences if one party breaches the MOU or LOI?  In many cases, the answer is not much. While a breach of a contract typically results in a lawsuit and the awarding of damages to the innocent party, a breach of a MOU or LOI usually does not. This is because the documents are not legally binding. They are more like letters of intent, non-binding agreements to negotiate in good faith.

What Exactly Is A “MOU”?

An MOU is typically used at the early stage of negotiations for an intended business transaction between parties. At this point, parties usually have yet to agree on all the essential terms of their transaction but still wish to set out its broad framework. An MOU is a document that outlines the understanding between two or more parties.

MOUs are often non-binding because they are preliminary agreements subject to a written contract. This incompleteness usually indicates the parties’ intention not to create legally binding relations until the enforcement of a formal contract or agreement.

The common uses of MOUs are:

  • to set out the general intent of the parties to prevent any misunderstandings;
  • to set out the critical points of a complex transaction to help to ensure that all parties are on the same page with regards to what is expected of them;
  • to provide safeguards in case the business deal collapses during negotiations;
  • to provide tangible proof of the business deal to potential investors.

What Must A “MOU” contain?

There is no hard and fast rule regarding what should be addressed in an MOU. 

As a general rule of thumb, an MOU should include the following information:

  • the general intention of the parties;
  • an overview of the business transaction;
  • the critical points of a complex transaction (e.g. price, quality and deadlines);
  • safeguards in case negotiations fail (e.g. confidentiality, non-disclosure and good faith).

Even though a MOU is not legally binding, it is still an essential document since the MOU records the understanding between the parties of the transaction and their intention. The purpose of a MOU is to foster collaboration, respect, and understanding among all parties involved in a transaction so that all parties can derive mutual benefit from the transaction.

If you’re need help drafting an MOU,  contact us via Lawyer Anywhere. We can help ensure that your MOU is as legally binding as possible.

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Top 10 Legal Tips For Small Businesses

TOP 10 LEGAL TIPS FOR SMALL BUSINESSES

Running a business is often exciting.  But without the right advice, it can also be a minefield, especially concerning legal matters.  Prevention is always better than cure. 

The following top 10 tips aim to guide you through the minefield:

 1.  Don’t Put Your Assets At Risk

 Are you running your business with your partners?  If so, are you aware that under Singapore law, all partners are jointly liable for the debts and obligations of the business?  So if your business encounters any problem, not only will your investment in the company be at risk, but all but your assets will also be at risk.  Depending on your business structure, it can help avoid liability – private limited company, limited partnerships, etc.

 

2.  Put It In Writing

All your business agreements must be in writing.  It is often difficult, if not impossible, to enforce an oral agreement.  You may have no recourse for compensation or legal action if problems arise.  So make sure all your contracts are written to give you flexibility and protection.

 

3.  Get Proper Legal Advice Early

 Different lawyers specialise in different areas of the law.  You must find the correct lawyer to help you. Every growing business needs a business lawyer since they are experienced in representing start-ups and emerging companies. The amount you pay for an early advice is usually substantially lower in the long run since it saves you time, aggravation and money.

 

4.  Spell Out Your Terms and Conditions

 Cash flow is the lifeblood of any business.  Make sure to spell out your terms and conditions (e.g. terms of trading) to all your customers. This way, you will not be at risk of being paid as and when the customers feel like it.

 

5.  Keep Up to Date With The Law

The scope of business law is extensive; as such, no business owner can be expected to be well versed in every aspect of business law.  However, it would be best if you had an essential awareness to help keep yourself out of trouble.  A basic understanding of the following topics is vital:

  • basic contract rules
  • major employer-employee laws (e.g. CPF contributions)
  • regulations of your industry

6.  Keep Employment Contracts Clear And Simple

It is essential to set out your expectations and rules for your employees.  No employer/employee is expected to be an expert in employment law.  Ensuring your employment contract is easy to understand would be helpful.

 

7.  Protect Your Intellectual Property

Do you have a secret formula for your product?  Do you think your competitors would love to get their hands on your secret formulae?  If so, you must take steps to ensure that your “secrets” are protected.  Such protection includes trademark registration, confidentiality agreement and non-competition agreements.

 

8. Keeping Proper Corporate Records

Small businesses are notorious for failing to keep records.  Failing to maintain proper or improper records can create ACRA and IRAS problems.  This may also result in personal liability or even hinder your ability to raise funds.

 

9.  List Down Your Rights & Responsibilities

If you run your business with your partners, have you consider what would happen if any partners left the company by choice or otherwise?  Partners or shareholders often fail to sit down and list their rights and responsibilities. 

When a problem arises, this often results in costly litigation fees, which drain parties financially and mentally. 

Such problems can be avoided by having an agreement which deals with the following issues:

  • how much capital must each person contribute?
  • what happens if the business needs more money?
  • what happens if one person leaves the business?
  • what happens if one person dies?

10.  Getting Involved In Litigation

Litigation fees can be astronomical.  You should always seek your lawyer’s advice for options such as mediation or arbitration to resolve the matter.  If, on the other hand, a suit is brought against you, call your lawyer immediately.  Do not attempt to respond without your lawyer’s advice, especially since the first response usually sets the tone of the proceedings.

Having difficulties putting these tips into action? Skip the hassle of waiting to make an appointment with a lawyer.  We offer video consultations via Lawyer Anywhere so that you can get the help you need. Contact us today to get started.

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True Files

Lawyers & Deal Breakers

LAWYERS & DEAL BREAKERS

Lawyers have often been branded as “spoilers” and the “deal breakers”; they cause business deals to be aborted by letting legal issues cloud business goals and commercial imperatives.

Being your lawyer, our responsibility is to protect your legal position.

When business imperatives prevent us from fully protecting your interests, we bring awareness of the risks to the forefront so that your business decisions are always INFORMED decisions; made with full knowledge of the risks involved.

Our approach: Better to go in with your Eyes Wide Open than to Plunge in Blindly, Hoping for the Best.

While we cannot insure you against business risks, we always have your best interest at heart.

Here is a cautionary tale – believe us when we tell you that it happens more often than we like, to the best and worst of our clients.

Our client was very excited about the prospect of new business through a joint venture with another company. The joint venture company was owned and operated by friends they knew well. Negotiations were conducted cordially over lunch and dinner. 

Being a lawyer (as always) looking out for our client, we proposed to draw up a simple “joint venture contract”, setting out the agreement reached by our client and their friends on the scope of each party’s contributions, responsibilities and share of profits.

When presented with the contract, their friends were livid; they called our client to say that the contract was inaccurate and that the lawyer was misinformed, misleading and missing the point.

Further, they claimed to have been insulted that our client even consulted a lawyer for what was, essentially, a venture between good friends based on mutual trust and friendship. They were, in short, not prepared to sign any contract.

Our client wanted the new business enough to forgo “the legalities” – which was how his new joint venture partners had belittled our efforts.

Barely six months into the new business, the client was back in our office. Not because he wanted to sue his joint venture partners for not making good on their verbal promises (this came later), but because he was now facing court action by third parties seeking compensation for failure to deliver on services which were the responsibility of his joint venture partners.

Contrary to popular perception, a lawyer is more valuable to you BEFORE a lawsuit arises. Speak to us over video consultation via Lawyer Anywhere.

Susan Tan

Senior Legal Executive

Qualifications:

With more than 10 years of experience in the financial industry, Susan Tan, who joined us from one of the leading corporate and investment banks in Singapore, provides invaluable expertise and knowledge in corporate secretarial.

She is conversant and familiar with the local regulations and requirements for business entities in Singapore.

As a member of our team, Susan is responsible for maintaining and updating the Company’s statutory registers and records, filing all necessary documents and forms with the Accounting & Corporate Regulatory Authority (ACRA), Ad-hoc assignments such as allotment and transfer of shares, amendment of Company’s Constitution and submission of Annual Return to ACRA.

Apart from corporate secretarial work, Susan has considerable experience and expertise in compliance advisory matters, making her a valuable member of our firm.