I recall hearing a story about two siblings who went into business together and formed a corporation. When it came time to borrow additional funds the owners used company stock as collateral. One of the siblings signed a document giving what he thought was 20 percent to the financial institution; when in reality his sister had written her name in the transfer line.
As time moved on, the siblings had differences of opinion concerning the direction of the company, and subsequently met with their attorney.
During the meeting the brother was informed that his sister owned 70 percent of the corporation, and she had instructed the attorney to fire the brother.
Reading is a fundamental basic of survival for a business. There is a constant requirement to review documents, contracts, proposals, etc., which can have a major impact on a business. With the every day task of running the business, sometimes it seems easier to sign documents without a thorough review. To a certain extent we are all guilty.
All business owners should seek legal counsel, especially when contracts or other legal documents are involved. Courts consider employee handbooks a legal contract. These handbooks are instrumental in dealing with human resource issues and should be reviewed by legal counsel prior to implementation. If the intent is not to use the handbook as a contract, then an attorney can advise what type of disclaimer should be utilized.
It is heartbreaking when one spends time and resources perfecting a product or method only to have it stolen by imitators. New products, methods, processes, services and designs can be protected by obtaining a patent, trademark, trade secret or copyright. However, prior to obtaining one of these government protections, one should consider confidential disclosure agreements, and employment or consultant contracts. Attorneys can provide the legal guidance needed to protect new products and methods.
As business owners continue to run their businesses, it is wise not to casually sign documents. Make it a practice to have an attorney review all documents before signing.
Sandra Taylor-Sawyer is director of the Small Business Development Center at Clovis Community College. Call the center at 769-4136 or visit www.nmsbdc.org/clovis.