Part IV: Contracts and Insurance
Business Contracts
Virtually every business is involved to one extent or another with contracts, whether it be a contract with an employee, independent contractor, vendor, or customer.
The idea behind a contract is simple: it is simply an understanding of “the deal” that exists between two parties. Most contracts can be just a verbal discussion or handshake between the parties to be enforceable. Businesses should avoid oral contracts just because it is subject to dispute. It is much better to have the parties’ understanding reduced to writing in a written contract.
If you are going to write a contract, make sure that it reflects the parties’ understanding of who is going to do what, when they’re going to do it, and for what payment. It does not have to be complicated, but you want to address the primary areas that you believe might come into dispute.
If you’re going to be using a written contract for multiple transactions over a period of time, it is a very good idea to have a lawyer give it a once-over. Remember, the goal is to be clear in stating what you intend to be the deal.
Unfair Competition
Unfair competition can occur when the defendant is passing off his goods or services as those of the plaintiff by virtue of substantial similarity between the two, leading to confusion on the part of potential customers.
Interference with Contractual Relations
The law recognizes a claim called “interference with contractual relations,” which occurs when a party improperly induces or causes a party to an agreement to end a business relationship.
The Role of Insurance in Helping Your Business Grow
No one likes paying insurance, because you are basically paying premium money in hopes that you will never have to use it. But, of course, if a claim is made against you, you’ll be very glad you have insurance covering the loss.
There is a wide range of insurance coverages. Most businesses want to consider having at least a commercial automobile liability policy and commercial general liability policy. These two policies will protect a business from the most typical business losses that can occur. But, depending on your business, a special type of insurance may be needed. For instance, contractors may need a contractors liability policy. Restaurants and bars may need additional liquor liability coverage.
Insurance policies are very hard to understand. Therefore, one of the many professionals you need to surround yourself with is an insurance professional. Insurance agents have at least a general understanding of what coverage is provided by the policies they sell, but keep this in mind: if the agent turns out to be wrong, the insurance company will always take the position that the only coverage extended is that which is stated in the policy. In other words, it does not matter to them what their agent may have said.
