I see a lot of people who are at the very early stages of planning a new business. As a result, I’ve developed an informal standard ‘laundry list’ of cautions to pass along to these clients in the first call I have with them.
Many people are surprised to learn that there are legal steps they should be taking toward their new business before they start building it. But there are, and they’re important, and dealing with these issues can be difficult and expensive if they’re left until some later time. (In a recent example, problems in this area cost a new client months of time in the market and a lot of money in legal fees for a litigator).
Summary
In brief, before you start you need to ensure that (i) any intellectual property and confidential information you create for your new business will be your own; (ii) you comply with any obligations you have in agreements with your current employer or with clients.
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An excellent, informative post. As a professional legal researcher, I would just like to add my two cents’ worth that either the independent contractor, employee, or employer really be aware of the various intellectual rights and properties they wish to keep separate from the employment/contractual relationship.
You are indeed correct that many such agreements contain vague terms or drafting errors, and so, it is crucially important for each party to consider the type and scope of the relationship that is being created, and to ensure that the relevant contractual terms clearly protect, and explicitly state, the respective rights and obligations of each party.
In my experience, I’ve found it helpful to check whether a specific right or intellectual property arrangement has been judicially considered in a contract law decision. This will often give one further insight as to possible contract drafting pitfalls that might lead to costly litigation further down the line – and key one in as to how one might improve the drafting of key contract terms in order to forestall that possibility.