Author: Isabella McMeechan
GDPR ‘D-day’ has come and gone, and somehow the world is still spinning. After the countless hours scale-up businesses have spent living and breathing GDPR, now is as good time as any to start thinking about… well, everything else.
Contracts are key to scale-ups - protecting your IP, not promising the world, and limiting your liability can be the difference between make or break for a growing company. To help show you mean business, we’ve come up with a list of ‘top tips’ for managing and reviewing contracts:
1. Set up an e-filing system. It may be a pain, but if you haven’t done this already, it will save you bags of time in the future when it comes to future renewals or problems, or if you sell your business (hopefully for a tidy profit).
2. Put together (or review) your standard terms. Your standard terms should reflect what you actually do, limit your promises and liability, and protect your IP. And, presentationally, having a respectable set of standard T&Cs will also make you look good.
3. Remember: no signed contract doesn’t mean no contract. Be aware that a simple ‘OK’ email, or even a verbal agreement, can be a contract (thumbs up emojis yet to be tested in court). To avoid unintentionally agreeing to T&Cs you never signed up to, also look out for companies attaching or hyperlinking their standard terms to POs or emails, and always try to have the last word.
Some of the key provisions to look out for in contracts
1. IP assignments. IP-wise, assignments are the most important thing to look out for. Check for any wording that your IP is ‘assigned’ to, or ‘owned’ by the other party: make sure you don’t inadvertently give away any of your core business or product IP. On the flip side, if you’re expecting to own the other party’s IP - e.g. where a design agency creates your new logo – make sure the contract specifically assigns this to you. Otherwise, the IP will still be owned by the company or contractor creating it.
2. IP licences. If you’re allowing a third party to use your IP, make sure that the right/licence is sufficiently time - and scope - limited, and where possible non-exclusive. Where a third party grants you a licence, make sure the licence is wide enough to cover what you plan to do with the IP.
3. Liability. It’s really important for scale-ups to limit their liability; unlimited contractual liability is one of the biggest risks to growing companies. Including a suitable liability cap (and excluding certain types of losses) will certainly help (done properly). It’s also a good idea to check your insurance policies cover the liabilities you could face under your contracts. On the flip side, don’t forget to look at the other party’s liability limitations and exclusions – are these so broad that you could recover almost nothing if the other party messes up?
4. Termination. This works both ways: you don’t want to tie yourself into a contract for too long (and want a ‘get out’ clause if things go pear shaped). But, if somebody is providing you with a critical service or product, you don’t want them to walk away too easily. Watch out for the other party’s termination rights being wide or discretionary, to help avoid your supposedly ‘long-term’ arrangement being terminated unexpectedly.
5. Non-compete. Is there anything which could restrict your ability to do business with anyone else? If you agree to work exclusively for, or in the best interests of, a company, you should at least be paid accordingly and limit the duration of any exclusivity.
Most importantly, read the whole contract and make sure it does what you expect, and keep tabs on sneaky small-print. Next time, take a peek before you sign on the dotted line, and you’ll be a step closer to protecting the growth of your business for the future.
Any questions? Contact Isabella McMeechan, Solicitor, at firstname.lastname@example.org