This document discusses the importance of contracts for businesses and lists several types of agreements that most companies should have in place. These include operating agreements, employment agreements, confidentiality agreements, intellectual property assignment agreements, service agreements, website terms of use, and others. Contracts help ensure smooth operations, clearly define responsibilities, protect companies from liability, and prevent legal disputes.

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2. Contracts
Most Companies Should Have
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

3. Why contracts are important
Having right contracts in place
• ensures that business is run smoothly by setting forth certain
responsibilities and procedures
• precisely determines the rights and interests of the parties
• protects from unexpected liability
• prevents misunderstandings and arguments between the parties
• enforces the agreed upon rights and interests of the parties
• helps to avoid protracted and costly litigation
• helps to avoid surprises in general
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

4. Operating Agreement
• depending on the legal structure of the company it may be a shareholder
agreement, if a business entity is a corporation, a membership agreement, if it
is a LLC, or a partnership agreement in case of the partnership
• serves as guidance for the business relationship between the owners of
the company
• sets forth the rights, interests, and responsibilities of the company owners
(e.g. voting rights, participation in the management of the company,
distribution of profits and losses between the owners, transferability of
ownership interest in the company, capital contributions and many others)
• sets forth methods and procedures of company operation and
management (acceptance of new owners, organization of the owners’
meetings, loan application procedures, evaluation of company’s assets,
dissolution of the company and many others)
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

5. Employment or Independent
Contractor Agreement
• sets forth the terms and scope of employment
• states vacation policy, absence of leave right, overtime requirements
and compensation, fringe benefits (e.g. health insurance and pension plans),
reimbursement of expenses and other policies of the company
• spells out the procedures for performance reviews, discipline actions,
and termination of employment
• confidentiality or non-compete requirements
• Intellectual property matters
• all other matters the parties negotiate and agree upon as a condition to
employment
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

6. Confidentiality Agreement
• entered into with everybody who may have access to
company’s inner information for any purpose (e.g. professional
consultants, employees, business partners, vendors, investors,
and many others)
• binds parties to keep certain business information as a
secret
• prevents them from disclosing this information to
competitors
• prevents them from taking advantage from this knowledge
to benefit themselves
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

7. Intellectual Property Assignment
Agreement
The law is that the ownership of the work product automatically lies with its
creator. Intellectual Property Assignment Agreement:
• is entered into with everybody who may create something for the
company during the course of their professional involvement with the
company (e.g. a business partner, independent contractor, employee)
• requires the creator to automatically assign his/her ownership in the
intellectual property to the company (e.g. a new product, service, method of
operation, marketing materials, name, concept, idea or anything related to the
business)
• prohibits the creator from using this product for purposes unrelated to the
company (either for others or for his/her own benefit)
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

8. Service Agreement and/or Sale
Agreement
• entered into with vendors, suppliers and customers of the
company
• sets forth definite terms of the agreement between the parties
• states the performance requirements (divisible or not,
assignable or not, etc.)
• manages parties’ expectations
• identifies parties’ liabilities in case of non-compliance
• negotiates particular dispute resolution methods in case of
disagreement between the parties
• often prevents arguments and protracted litigation
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

9. Terms of Use for the Website
Representations made by the company on its website may be an enforceable
contract. Terms of Use should contain, among other statements:
• description of the services and scope of representations
• restrictions on use
• limitation of liability
• disclaimers of warranty
• rights of the company in relation to its website users
• company policies (e.g. refund/exchange policy)
• privacy considerations
• system requirements
• all required notices to its users (e.g. copyright notice, license, etc.)
• choice of law and jurisdiction
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

10. “Nothing in life is to be feared, it is only to be
understood. Now is the time to understand more,
so that we may fear less.”
- Marie Curie