Legal Documents for Startups
Protect your startup, portray a professional image, maintain your business relationships and limit the probability and cost of disputes.
When clients come to lawyers with legal disputes, the source of that problem usually arises from poorly drafted or non-existent Legal Documents (Contracts) or governance problems. It is far less common for us to see clients with solid legally binding and clear Contracts ending up in a legal dispute. The hypothesis here is those with solid Legal Documents are able to avoid or resolve disputes without resorting to lawyers, litigation and the courts. There is no doubt, prevention is better than the cure.
Avoiding disputes is only one factor to consider. What follows are our top 5 reasons why your business should invest in well drafted Legal Documents.
The top 5 benefits of quality Legal Documents for Startups
There are numerous benefits of having well-crafted Contracts drafted for your startup, here are 5.
Protecting your business
It almost goes without saying, but quality crafted Legal Documents for Startups will often assist in limiting liability, excluding implied terms, avoiding penalties and clarifying obligations. All to often documents are sourced from the internet which are totally inappropriate for Australian circumstances.
The Australian Consumer Law (which is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) has provisions which explicitly prohibit purporting to exclude the consumer guarantees, even if you try and do it with CAPITAL LETTERS. This is a drafting technique often employed by US attorneys, so if you are reading a document with capitalised exclusions of guarantees and liabilities, you are probably reading a document designed for the, often incompatible, US jurisdiction.
Legal Documents for Startups should portray your business as professional, organised and governed appropriately. With quality drafted Contracts to present, you will be confident in giving customers and business partners the right impression.
You would not hand over a business card ‘crafted’ with clipart and printed on copy paper so why would you hand over a Contract which is poorly drafted or worse, potentially unlawful.
Reduces the risk of disputes
With a threatening dispute a well-crafted Contract is the source of truth and a means of appealing to a higher power. If the parties can refer back to what was originally agreed they are more likely to simmer down and move on amicably.
Furthermore, when we draft Legal Documents for Startups we usually include dispute resolution clauses which require parties to enter into mediation before charging head on into court. Ask us if these clauses are right for your business.
Protecting your business relationships
The breakdown of relationships is often attributed to some failing in communication. Having quality Contracts reduces the chance of miscommunication and therefore helps to preserve valuable business relationships. The process of preparing and reviewing Contracts helps to ensure both you and your business partners have an actual meeting of minds and are not just running head on into a transaction based on assumption.
Similarly, when you receive a Contract, having a skilled lawyer review it adds another set of eyes to the transaction. This can assist with both identifying potentially contentious issues which may arise as well as what clauses may be missing.
Reduces the costs of disputes
If your Legal Document avoids just one round of litigation in the courts, it could well have paid for itself 10 or 20 times over. If you end up in litigation anyway, then a well-crafted Legal Document will be easier to understand and likely reduce the number of issues in dispute. Less issues in dispute means a shorter trial, thereby reduces the cost of any dispute which does arise.
Often overlooked is the opportunity cost of disputes. That is, if you are spending your time, responding to a claim or allegation, talking to lawyers or worse still sitting around in a court room waiting for or attending a trial, then you are not out there progressing your business.
Make no mistake the opportunity costs of your time dealing with a dispute is substantial, so is the emotional outlay.
Need a Contract reviewed or drafted?
IT and Startup Lawyers read, review or draft Contracts almost every day.
We do not do litigation, and as we tell our clients, it is our job to try and keep you out of court not guide you through, or dig you out, if you end up there. We are real commercial lawyers with a strong motivation to help you build and develop your business, not waste time squabbling over miscommunications. That said, if you do end up in litigation, we can refer you to an appropriate associate.
With experience across a wide range of industries and qualifications in law, accounting, business, IT and governance we are well position to prepare practical commercial Contracts.
We can’t guarantee you will completely avoid litigation but we are certainly her to give you a fighting chance.