Hey there, I’m Janelle Peyton, and welcome to 10 on Tuesday—the podcast where I answer one burning legal question in 10 minutes or less. No fluff, no confusing legal-eze—just real answers to help you grow and protect your business.
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When Do You Need An Attorney To Review Your Contract?
A contract is a legally binding document signed between parties entering into an agreement. It imposes certain obligations upon the parties concerning one another. Since contracts are documents that are enforceable in a court of law, it is wise to get them reviewed at various stages by an attorney to fully appreciate what one is agreeing to and to protect one’s rights during the entirety of the contract. Whether you are taking a new job or signing an affiliate business agreement, it is important to understand what risks may be hiding in the document you are about to sign.
Before You Sign
It is essential to have the contract vetted by an attorney before putting pen to paper. Pick an attorney based on the type of contract you are entering, as different attorneys may specialize in different fields of law like tax, intellectual property, employment, or business agreements. An attorney will be able to review sensitive clauses important to the validity of the contract that may miss the attention of a layperson, such as what constitutes a material breach, the length of the terms, and whether the contract is in accordance with the laws within your jurisdiction.
Protecting Your Rights
Your lawyer may also point out whether or not the contract is fair to you. They will review the fundamental terms of the contract and if a greater number of obligations or penalties are attached to you as compared to the other party, the contract would not be treating both parties equally. A good attorney would demand a revision and alteration of such a contract before signing it.
Filing the Correct Documents
Get your contract reviewed to understand if any documents need to be filed or signed in addition to the contract itself, such as a non-disclosure agreement or proof of ownership in contracts involving property. An attorney will help prepare a list of all such documents to be filed and will also make sure that these documents are up to date. In cases where a secondary document, like a non-disclosure agreement (NDA) needs to be signed, the attorney may also go through its term to ensure fairness and avoid any prejudice against you.
Modifying the Contract
It is wise to retain the services of an attorney, as you may not feel confident requesting the offeror to modify the terms of the contract. Having an attorney guide you through this process as well as explain the legal ramifications of any adjustment is a good option to have. A review by your attorney at this stage will ensure legal validity as well as protection of your rights that may change through any modification of the agreement. Many make the mistake of having an attorney review a contract after signing because they do not realize they have the opportunity to negotiate. Once you have signed, renegotiation Is difficult. and often unlikely.
Breach of Contract
A breach of contract will occur when any party does not fulfill its contractual obligations. The consequences for a violation are often defined within the contract and may include termination and possibly arbitration or even litigation. A ‘dispute resolution’ clause within the existing contract is generally helpful in resolving any problems between the parties. Having your attorney review the contract at this stage is essential to evaluate whether a breach has taken place from your end or your rights in the agreement have been infringed by the other party. For example, a one-sided litigation clause can sometimes be hiding in the contract, requiring that you pay all attorney’s fees regardless of who wins the litigation. Your reviewing attorney will renegotiate this and other terms, as well as advise the future course of action that will include possible remedies like going to court or settling the dispute internally.
Final Words
It is always prudent to review your contract with an attorney before signing it, as it will help clarify the rights and responsibilities of the parties, and reduce the chances of conflict and breaches later. If the contractual relationship between the parties breaks down or changes, it is also helpful to take an attorney’s advice on what steps are to be taken and how to best protect one’s rights granted by the agreement.
Next Steps
If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand-building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.
Are you becoming a Member of a Business? Here’s what to look out for.
- Confidential information.
Depending on the nature of the business you are becoming a Member of, confidential information could be defined narrowly, as intellectual property such as patents or designs, or it could be as broad as company strategy, client lists, business practices, and other operational information. It is critical that these clauses are clarified, preferably in writing, to ensure that you understand what is confidential when you are operating in your new role as a Member. To ensure you know what is confidential, you can request a further breakdown of what the Company would consider confidential, or a request that information that is considered confidential is labeled as such throughout communications of the specified information. This will help you protect yourself moving forward, both as a Member, and if the relationship terminates and you seek to stay in a similar industry.
2. Time dedication.
In becoming a Member of a Company, you may already be a full-time employee, or you may just be a part-time entrepreneur working with or running a number of businesses. It is critical that you review the time management or time requirement clause to ensure that your expectations align with the Company’s. Further, many times a requirement of full-time dedication is boilerplate language that is also considered a material part of the agreement. This means that if the relationship goes south, the Company could theoretically rely on this clause to show a violation of the agreement and take action to remove you as a Member.
3. Remedies for Breach.
Remedies for breach could range from extremely strict to very lenient. We recommend ensuring there is a clear opportunity to cure, meaning a period of time to right the wrong. Note this opportunity to cure cannot be applied to all breaches, such as legal violations applicable to the business of the Company or dishonesty in financial dealings. Generally, you as a Member join into the LLC with a capital contribution or other exchange that affords you a number of units, or a certain amount of interest in the Company. It is critical to understand what impact your termination or breach has on your interest. For example, if you barely provided any contribution upon joining the Company, and the clause states that simply returning your contribution means that your interest is transferred back to the other Members of the Company, you can be bought out for that minute amount. Alternatively, it is preferable that your interest is purchased from you for the value at the time of your departure.
4. Valuation.
How any interest or assets of the Company is valued directly impacts every Member of the Company. This calculation can change how much an annual distribution is, how much interest is purchased for at the time of a Member’s departure, or how much a Member is paid if the Company is dissolved. Generally, valuation is performed by a certified public accountant (CPA) or accounting firm that is familiar with the business the Company operates in. Something to watch out for is valuation by the Manager alone. There is nothing to ensure that things are valued in realistic terms, especially where the valuation clause is defined by “in the Manager’s discretion.” Such language provides no checks and balances on the Manager to ensure the determination is defined by fair market value.
5. Restrictive Covenants.
One of the final clauses to pay close attention to is any restrictive covenant. These are generally non-compete and non-solicitation clauses in these types of agreements. They can sometimes be intertwined with or hidden in the Confidentiality clause. These may be upheld by a court if contested, but they must have some restrictions on them. These are generally in the form of geographic and time restrictions. For example, a non-compete that covers the entire United States is generally going to be struck because the geographic region is too expansive. Each state also generally has a reasonably approved time constraint, usually falling between 1 and 3 years. These agreements can hinder your ability to start your own company or even apply for new jobs when you leave the current Company. Pay attention to the manner of departure, attorney fees, and compensation for signing the non-compete. It is important to understand your own plans and goals as to how this can impact you in the future.
Remember, you are in a position to negotiate each term in the agreement before signing. It is recommended that you hire counsel to review and work with you on negotiating the terms to make sure you are protected, and your interests are supported in becoming a Company Member.
Next Steps
If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.
Today’s consumers are inundated with options. Thousands of businesses offer similar products and services or promise similar results. How does a consumer choose one business or product over the other? The answer: consumers will always gravitate toward distinctive, uniquely relevant brands.
With such high saturation in most markets, it can be easy for a business to get lost in the crowd. Brand differentiation is key to your business’s products or services standing out.
What is Market Positioning?
Market positioning is the process of creating a specific image or identity for a product or brand. Successful market positioning allows a business to occupy a distinctive place in the minds of their target consumers. This strategic exercise in consumer perception helps businesses establish unique places in their market and stand out from their competition.
Strong market positioning is essential for brands to become visible to their target audience and make a lasting impression. Once a business pinpoints what makes them unique, they can discover a positioning strategy that works for them. A strong positioning strategy highlights the unique features that make a brand different from its competitors.
For example, one company may find that their pricing is lower than their competitor’s and then position for affordability. Conversely, an organization may find their pricing is higher than their competitor’s and then position for quality or luxury status. Businesses may also focus on their product’s special benefits, ease of use, convenience, and more.
Why is Positioning in Marketing Important?
Positioning in marketing can essentially be boiled down to how a business wants to be perceived in relation to their competitors. The goal of market positioning is to find a defining characteristic that will help a business eclipse their competition.
Successful positioning results in a brand gaining the competitive edge they need to improve sales and promote company growth. Strong market positioning also helps businesses more clearly define their target market and better connect with their target consumer’s needs. As a result, brands can make more effective business decisions.
How to Create Strong Brand Positioning in your Market
Positioning in marketing is not easy. It requires extensive research and dedication to a specific niche, idea, or target audience. Effective positioning strategies consider three areas: the needs of the target consumer, a business’s own strengths and weaknesses, and the strengths and weaknesses of their competitor. Outsourcing this work to a marketing company is a great option for small businesses that do not have the in-house resources to complete extensive market research and cannot rebuild their brand’s architecture on their own.
First, businesses need to examine their existing position in the marketplace and determine their point of difference. Businesses may find they are marketing their product or service just like many other businesses on the market. Understanding their current market position gives businesses important insight into what needs to be changed and where to go next.
After understanding their current market position, businesses must analyze their competitors. How is the competition positioning their brand and products? Competitive analysis may reveal that one competitor’s weakness is another business’s strength. Once they have located an untapped corner in their market, businesses can begin to build a unique marketing strategy.
Once marketing materials such as slogans, logos, designs, or websites have been created, they need to be cleared for use. After your attorney conducts a search of registered marks and confirms your business can use them, you will then want to file for the necessary intellectual property protections to secure the unique materials for exclusive use.
Legal Considerations: Intellectual Property Protections
Market positioning is much more than selecting a category. The business has to commit to embodying the identity in all of its branding materials, products, and content. A strong market positioning strategy drives the words, phrases, logos, product names, and entire image of a business’s branding. Consequently, protecting your business’s intellectual property is an important part of your market positioning strategy.
Once a business has developed a strategy to cement their brand in a desirable position, they then have to actively protect that position from competition. Protecting your intellectual property means turning the unique, intangible aspects of your business into exclusive rights. As a result, competitors are unable to commercialize and benefit from the branding materials and content strengthening your market position.
Intellectual property protections naturally enhance market positioning strategies because they help secure exclusive brand identities, distinguish products or services from competition, and prevent competitors from encroaching on the unique concepts that identify your brand.
Next Steps
If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.