For several days in December most years, I clean out the cabinets in my house. I discard items I haven’t used in the past year and make a list of those things I need to fix or replenish. Unless I block out this time, it won’t get done.

While preparing this article, I thought about doing such an assessment for our businesses. As 2022 moves forward, you might want to reflect on the following legal issues.

1. Agreement Among Shareholders of Your Company

If your business has more than one shareholder or member, if for example it’s an LLC, you’ll … Read the rest

Reprinted from April 2017, Agency Sales magazine

My client, an independent sales representative, was named as a defendant in a product liability lawsuit. Admittedly, that’s not the norm, but this article should serve as a cautionary tale to consider issues of product liability, indemnity and insurance when negotiating contracts with your principals.

My client’s rep firm represents manufacturers of commercial office and restaurant furniture. Not particularly dangerous stuff, right?

Her firm solicited an order from a restaurant for the sale of bistro chairs and tables. Five years after the restaurant received the furniture, a restaurant patron took a seat on … Read the rest

When sales reps enter into a new contract with a principal, they’re understandably most focused on what’s happening right now:

• Will it be an exclusive?
• What will the territory be?
• What will the carve-outs be?
• What will the commission rates be?

Few sales reps focus on what will happen when the relationship will end. And make no mistake, it will end — the question is when and what will happen when it does.

Fast forward some years, when some of the excitement of the new relationship has subsided. You’ve spent huge amounts of time, money and resources to develop sales … Read the rest

Contract Templates:
One Size Does Not Fit All

When using contract templates, sales agencies tend to think of them as one size fits all: Just insert the agency’s name, the other party’s name, the effective date, names in the signature blocks, and voila! You’ve created a ready-to-sign contract!

If Only It Worked That Way!

Contract templates are valuable; they address the issues important to a sales agency and incorporate “time-tested” language that defines what happens in case of a legal dispute.

However, the very definition of a “template” is that it is a standard form; and when one ponders this, … Read the rest

My client, an independent sales representative, was named as a defendant in a product liability lawsuit. Admittedly, that’s not the norm, but this article should serve as a cautionary tale to consider issues of product liability, indemnity and insurance when negotiating contracts with your principals.

My client’s rep firm represents manufacturers of commercial office and restaurant furniture. Not particularly dangerous stuff, right?

Her firm solicited an order from a restaurant for the sale of bistro chairs and tables. Five years after the restaurant received the furniture, a restaurant patron took a seat on a bistro chair which overturned, severely injuring … Read the rest

Contracts with your co-owners, investors, employees and independent contractors are important to establish the guidelines and protect the relationships within your company.

1. Business Structure and Buyout Agreements

The documents establishing your business are themselves contracts among the owners. Articles of incorporation, by-laws, operating agreements of limited liability companies — all are contracts establishing the terms of the investment, and dividing profits, losses and responsibilities.

Whatever your form of business, if there is more than one owner, you should consider a “buyout agreement.” This will help avoid an unwanted and often disruptive change in ownership. Such crises can occur when … Read the rest

As independent sales representatives, you’re all too aware of the issues surrounding payment of commissions from your principals:

• When are they earned?
• When are they payable?
• Your entitlement to commissions on backlog orders upon contract termination.
• Your rights if the principal doesn’t pay.

These same issues pertain to the payment of commissions to your sales employees.

You’re also probably aware that many states have enacted statutes protecting your rights as an independent sales representative to payment of commissions by your principal. Many of these statutes levy multiple damages and attorney’s fees upon the principal for failure to pay commissions to … Read the rest

Businesspeople often think that once they’ve discussed and agreed upon the deal with the other side, the written contract is simply a formality. They tell me it’s the relationship that’s key and the contract is for worst-case scenarios.

The contract is often considered “boilerplate.” In fact, how many times have you thought that yourself or heard the following in response to your question/ objection to a clause in your principal’s contract: “Don’t worry about that term; we won’t enforce it, it’s just boilerplate”?

The boilerplate can be very important and may even preclude prior agreements you’ve had with your principal. … Read the rest