Search Site
Menu
Office Location :  3200 North Central Avenue, Suite 2500, Phoenix, Arizona 85012
We are open and ready to serve you. We offer video, phone and email consultations.
Litigation and transactions work can be done remotely.
Click Here to Learn More on How a Case Evaluator Can Assist
866-696-2033
Contracts

LIST OF CONTRACTS©

Most business owners have all of their eggs in one basket,
so, it is important to have a good basket.
Good contracts are the woven strands of that basket.

The following are contracts you might need and that this firm can promptly prepare for you.

In addition to the List of Contracts below, this Site, at the top of the Home page under the Tab “Publications,” has articles and excerpts from books I have written, and under the Tab “Blog” contains many interesting articles about current events in business and law. Please let us know your questions and comments at [email protected].

Accredited Investor Questionnaire

The key purpose of this document is to qualify investors; i.e. to be sure they are accredited or at least sophisticated with investments of this type. By having the investors acknowledge their stature and ability to absorb the loss the Questionnaire is one of several documents designed to protect the company against investor lawsuits. The others include the private placement memorandum and the security purchase agreement.

Asset Protection Trust

Asset protection trusts, also called domestic asset protection trusts, furnish another level of protection against lawsuits by having a trust instead of the individual own the shares or membership interest. At the firm we often combine this with what we call the “sunny” and “rainy day” limited liability companies (“LLC’s”) where business is done in and by the Sunny LLC until creditor problems appear in which case business may shift to the Rainy Day LLC.

Asset Purchase Agreement

An asset purchase agreement is one type of contract, and way, to purchase or sell a business. Another way is to purchase or sell the shares or membership interests of a corporation or LLC. The asset purchase-sale agreement is the most common business sale agreement because, unless there are other issues such as fraudulent transfer or successor liability, by buying the assets the buyer usually avoids tax and creditor claims which follow the sale if the buyer buys the entity, or more accurately, the ownership shares or interests in the business entity.

Assignment of Interest

We most commonly use an assignment of interest to transfer a membership interest in a LLC, usually as part of a more complete set of purchase-sale documents, but it can also be used to transfer corporate shares. Typically, an “assignment” is used for intangible property while a “bill of sale” is used for hard assets.

Assumption of Risk Agreement

Assumption of risk “agreement” is a little bit of a misnomer; this could also be a general release or waiver of claim (see below). Assumption of risk language is included to reduce the likelihood of personal injury claims arising out of what could be a hazardous activity, e.g. extreme sports or rock climbing. By signing this agreement the participant acknowledges he or she knew “going in” that the activity was dangerous.

Bill of Sale

The bill of sale conveys of tangible personal property, like a desk or business equipment. Often this document is part of a more complete set of documents, e.g. in the asset sale of a business.

Business Agreements

“Business agreement” is a general catch-all phrase for a variety of agreements, mostly commonly, operating agreements for an LLC, a membership interest buy-sell agreement, sales contracts, service contracts and many others of those listed in this List of Contracts. The important thing to know about business agreements is they are like shoes; one size does not fit everyone nor is one pair suitable for all occasions. The contract should be tailored to fit the particular business needs and use. For more on this subject please see my article “

The Falsity of Forms, Ten Things You Need to Know about Business Contracts.” ©

A copy of this article should be available on this site, or you may obtain a copy from the firm at [email protected].

Business Purchase-Sale Agreements

This could be either the asset purchase-sale agreement (discussed above) or the purchase of shares or interests in a company to become the owner of that company.

Buy-Sell Agreement

This is kind of a business pre-nuptial agreement. Back in the days when there were no LLC’s, the “buy-sell agreement,” as I am using the term here, was called the “shareholder’s agreement.” Its purpose was to agree in advance how the ownership shares or interest in a company would be handled in the event of divorce, death, disability and in some cases termination of employment of an owner. It specifies the trigger events for transfer of the interest, the purchase price and the payment terms. Related purposes of this agreement are to provide funds to the surviving spouse and to prevent having a grieving spouse who may know nothing about the business sitting at the table and needing money.

Bylaws

Bylaws, or “corporate bylaws,” specify the rules and procedures for authorized and effective corporate action, including scheduling and quorums for meetings, and defining the positions, authority and responsibility of the directors and officers of the organization. Often the most important thing about Bylaws is to have them because with corporations the failure to follow corporate formalities can result in the loss of limited liability protection, i.e. one can become personally liable for company actions.

Chattel Security Agreement

Also called simply the “Security Agreement” or “UCC Security Agreement,” this document is used to have a debtor pledge assets –often goods purchased on installment – as collateral for the debt. The pledge typically includes after acquired property and proceeds of collateral sold). It is this agreement which allows a creditor to repossess the personal property. (“Chattel” is an old English term for personal property, like tables, chairs and equipment). Without such an agreement the creditor can only sue on the note.

Confidentiality Agreement

The phrase “Confidentiality agreement” includes at least two types of agreement: One, the non-disclosure agreement (aka NDA) used by persons or companies to protect their ideas or technology from disclosure or use by a party receiving such information, usually incident to a potential transaction between the disclosing and recipient parties. Two, as used by this firm, a form of employment agreement under which non-key employees pledge not to disclose or use confidential information during or for some period after employment. (Management, engineers, sales persons and other key employees will be covered by the “key employee agreement.”) The key employee agreement creates substantial “Costs” to the employee to leave. The confidentiality agreement makes it less likely the “rank and file” employees will leave with the key employee because the benefit for them is not worth the “Costs” of being sued. This stops or greatly hinders the “coup.” For more on the subject of “Costs,” please see my article “Why People Sue, The Ins and Outs of Commercial Litigation, including Discussions of Decision Rules for Litigation, “The Reality Check,” “The Money In, Money Out Fallacy,” “The Follow the Money Rule,” “Metaphysical Market Forces,” and the Axiom “Maximum Benefit Requires Maximum Input.”© A copy of this article should be available on this site, or you may obtain a copy from the firm at [email protected].

Consulting Agreement

Consulting agreements are used when one is selling knowledge or knowledge-based services, usually as needed or on a periodic basis. Typically, such agreements are used by technology service companies, e.g. your outside computer network specialist, accountants, business consultants and business planners.

Contractor Agreement

In the narrow sense “contractor agreement” means an agreement between the primary goods or service provider as an agent and the owner or company as the principal. This includes not only the contract used to build or remodel a home or property, but also directly with the owner, government or company. This “prime contract” grants the rights and responsibilities to manage and complete the project and to hire sub-contractors to provide various goods and services for it.

Dealership Agreement

Typically a “dealership agreement” is used between the manufacturer or licensor of a product, say a medical device or gun oil, or brand, say True Value Hardware, and persons authorized to sell the product; hence, the name “authorized dealer.” Being a dealer typically connotes a privilege or special right that not every product seller would have, e.g. to sell BMW’s.

Debarment Statement

Contractors, including contractors with subcontractors which do business for the federal government, must sign or include with their agreements a litany of provisions including lobbying, felony convictions, and prior defaults. One of these is the debarment statement by which the product or service provider certifies that the organization and its principals are not debarred (barred), suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency from doing business with the Federal Government. This is required for contracts, at last look, over $30,000.

Deed of Trust

The deed of trust is used to pledge real property (i.e. land or building) as collateral for a loan. The underlying loan can be for the property purchased with the loan or for some other purpose. Deeds of Trust are used in westerns states. A similar document used in other states is called a “mortgage.”

Design Agreement

Design agreements are used most frequently by our firm clients to buy or sell the ideas for, and composition of, websites or logos or as part of the design and development of software. An important thing to know about “design” is that if you do not have a contract or document saying that you own the design, then under the common, i.e. case, law there is a good chance you don’t, the designer does, even if you paid for it.

Development Agreement

“Development” in law and practice has different meanings according to the industry. In real estate a development contract would be used between “co-developers” or between the developer(s) and the property owner to “improve the use” of the property by building a shopping center, office building, apartment complex or similar structure on the land. In technology a development agreement is used to design and create software for hire for a customer or between developers with different capacities and skills to jointly develop technology for new functions and products.

Domestic Asset Protection Trust

(See Asset Protection Trusts above)

Disclaimer

Disclaimers are used to renounce or deny rights or responsibility, e.g. the right to a name, or responsibility for loss caused by particular events. Warranties of fitness (of goods) for particular purpose, e.g. the durability of the paint on a wet, sunny wall, or for performance beyond those warranted (i.e. “guaranteed”) are often disclaimed.

Distribution Agreements (National and International)

A distribution agreement is used by manufacturers of products, whether chain saws or cosmetics, to hire companies who promise to market and sell the products in certain territories (say the Southwest), in certain markets (say luxury goods stores or drugstores) in a certain manner (say by sales representatives or dealers). Due to the number of important factors to be considered and handled, Distribution agreements can be long and involved. For more on this subject please see my article Distribution Deals, The “Dirty Dozen” of Distribution Contract Terms© available on the site or from the firm. International distribution contracts can be even more complex, because permissible provisions, the meanings of terms, required specificity and precision and governing language vary by country and must be negotiated.

Employment Agreement

Employment agreements define the position, the job description, the job requirements, performance requirements, pay and benefits. In many states, like Arizona such agreements are used to protect confidential information, clients and employees from solicitation, and competition within defined product categories or territories for a specified period of time. Incidentally, unless a contract is in place in and under which the employee agrees that, post employment, he will not target company employees and customers or sell the same or similar product in the same market area, then the employee is free to do so. Not having such an agreement can be disastrous to the employer. For more on this subject please see my article “

The Falsity of Forms, Ten Things You Need to Know about Business Contracts.”

A copy of this article should be available on this site, or you may obtain a copy from the firm at the firm @ azbuslaw.com.

Entertainment Contract

The rubric of entertainment includes a number of contracts including booking, management, talent, producer, and publisher agreements, to name a few. This category of documents may also include licensing agreements for the use of copyrighted materials, e.g. songs and scripts. This firm recently successfully negotiated the right of use of a song used in the movie Selma and its soundtrack.

Franchise Agreement

The franchise agreement is the long agreement you sign when you purchase and agree to be bound by the marketing and operational rules of the parent company.   Certain fairly standard provisions of franchise agreements are not lawful in some states. The franchise agreement follows the franchisee’s review of the franchise disclosure document.   A major problem in franchise law is the layman’s (and some attorneys’) failure to appreciate the reach of franchise law. Basically, if a company name or trademark is used, for money, with operational assistance or control, then the relationship and agreement is subject to federal, and some state, law with federal penalties and civil claims following from the failure to follow the disclosure and time requirements prescribed by federal law. One of these requirements is the required Franchise Disclosure Document.

Franchise Disclosure Documents (FDD)

The franchise disclosure document, formerly called the “Offering Circular” is required by federal law. It discloses the nature of the franchise, where it operates, who operates it, their background and qualifications, the number and location of present franchisees, those pending and closing, fees, required investment, etc.

Government Contract Addendum

(See Debarment Statement above)

Handyman Agreement

Its name states the purpose of the agreement. Under Arizona law a handy man, among other prohibitions, does not install or

attach manufactured products, or if he installs or attaches such items the total value of the sales contract or transaction involving such items and the cost of the installation or attachment of such items to a structure does not exceed one thousand dollars, including labor, materials and all other items,… Many agreements have potential pitfalls. With handyman agreements the client must be aware of local rules governing contractors of all types, enforced (in Arizona) by the Registrar of Contractors. A handyman is allowed to fly under the radar of contractor license requirements, but must keep the contracts small and not do home remodeling or similar larger jobs. Also, a handyman cannot be involved in property management, e.g. with an apartment complex, or accept tenant money. These functions (in Arizona) are governed by real estate law, require a license and the funds received are held in trust for the benefit of the property owner.

Independent Contractor Agreement

Any contract with a third party provider, e.g. with this firm, is an independent contractor agreement. The designation “independent contractor” is in contrast to “employee.” Historically, many businesses, especially start ups, have attempted to avoid the administrative requirements and costs (e.g. social security, unemployment, workers’ compensation and benefits) required by state and federal law by designating certain workers as “independent contractors.” This was never a good idea. The first worker to become disgruntled held the switch to the “nuclear bomb” of a federal and state audit of all worker records, not just the disgruntled employee’s. It is even less of a good idea now.   States are hungry for money and the definition of “independent contractor” is shrinking. In Arizona unless one has other clients besides the employer then the worker is an employee, even if the worker furnishes his own equipment and controls the time and manner of work. The old IRS “20 questions” standard no longer applies. Today, factors include the relative permanence and regularity of the work for that company, the right to refuse work, the right to hire sub-workers, the right to sell the “business,” etc. In spite of the above, certain industries like entertainment and trucking, as well as evolving industries like local photographers and mobile medical services, still allow independent contractor relationships and agreements in some circumstances.

Intellectual Property (IP) Agreement

“Intellectual property” includes patents, trademarks and copyrights, the latter two whether or not federally or state registered. With our firm intellectual property agreements arise in the context of the development or use of technology. A customer may want to hire a software developer to develop specialized software for its industry. The customer wants to own that customized software while the developer want to retain the rights to the software and tools its uses for many customers. An “IP Agreement” may also be used to make clear whether the person or company creating the intellectual property, e.g. technology, will own the technology or it is the property of the company who hired the IP developer. Without an agreement ownership may be subject to argument. For example in a case early in my practice I learned that the designer owns the design as a matter of common law unless the Design Agreement says the recipient owns the design. This is counter-intuitive, to me at least, I would have thought that if I hired the designer and paid for the design, I owned it — not so, at least the last time I looked. In any case this kind of argument shows the need for a good Intellectual Property Agreement.

Investor Questionnaire

(See Accredited Investor Questionnaire)

Joint Venture Agreement

Strictly speaking a “joint venture” is a partnership between two or more parties for a particular purpose, e.g. property development, and not on an ongoing basis. Because joint ventures suffer the same negative attributes as general partnerships, i.e. the liability of one party, say “Y,” for the actions of another, say party “X,” even if the parties had an agreement that X would not do the action in question. These days, joint ventures often create a new entity, say “Newco LLC,” to perform on the project; thus, Newco LLC is liable for the actions taken, not the individual partners. A variation is to have the joint venture “partners” be new entities with limited assets and risk.

Letter of Intent

A letter of intent is a preliminary agreement in which the parties declare their intent to investigate and perhaps consummate a transaction on certain terms provided that their due diligence confirms the facts and representations and reveals no “deal- breaking” events or circumstances. The letter of intent is subject to the definitive final purchase or sale agreement. In addition to the “deal points” key provisions of the letter of intent are the “stand still” and confidentiality terms. “Stand still” means the parties are “engaged” and not shopping for another deal and agree to keep the information disclosed or received incident to the deal and due diligence confidential.   Many business brokers’ “letters of intent” lack these key provisions, so provide adequate protection neither to the buyer nor the seller. (Similarly, a broker’s business sales contract typically furnishes minimal protection to the parties because its object is to close the deal, not to ferret out and resolve issues, or to advocate for either the buyer or the seller. In contrast, lawyers are always an advocate for the client, not just in litigation but in transactions as well.

Liability waiver

Also called a “release,” “waiver” or “release and waiver” this is a contract provision or self-contained agreement under which one intentionally and knowing gives up, i.e. forfeits, a right the party knows it could have had. Waivers are used in potentially hazardous situations, such as kids’ bouncy parties, and in the photography and entertainment industry where the subjects, actors or models release claims for the use of their likeness. The range of areas where waivers are used is broad. We have created waivers for ice skating events, bouncy parties, and do-it-yourself body piercing kits to name a few.

License Agreements

A license agreement is one form of intellectual property agreement (see above). Under a license agreement one pays a royalty or fee for the right to use something. This “something” can be technology, e.g. the right to use proprietary software, like Windows XP, or intellectual property like the right to use a trademark on a product, or copyrighted material, e.g. a rock song. License agreements are a staple in this software and brand driven world.

Limitation of Remedies

Limitation of remedies clauses, also known as “limitation of liability” clauses are a form of notice and waiver by which the parties allocate risk under the contract. By this provision a party or the parties agree not to seek certain kinds of damages on certain kinds of claims. Common “limitations” include the agreement not to seek “consequential damages” and to put a cap on the total amount liability on any and all claims. The best example of consequential damages is lost profits. Say a manufacturing company sells a piece of equipment. Usually the company will warranty that the equipment will function as promised and agrees to repair or replace the equipment if it doesn’t. But, the manufacturing company does not want to be liable for profits its customer lost due to sales that could not be made during the period of equipment breakdown, so it will include a limitation of remedies clause in the contract under which the manufacturer is not liable for the lost profits. The manufacturer may also include a cap on damages of any kind, e.g. that the manufacturing company’s liability for any breach shall not exceed the

amounts it has actually been paid for the equipment. Limitations of remedies clauses are important and extremely beneficial to the business client, but many business contracts do not have them.

Limitation of Warranties

Typically, the company will warrant (guarantee) that the goods will perform as promised and the services will be of workmanlike quality. But, many companies will want to limit their risk of claims and loss by disclaiming certain implied warranties like merchantability or fitness for a particular purpose. The merchant (one who sells goods of that kind) can disclaim these implied (by law or events) warranties by stating in the contract that it is not making these warranties; that is, the goods or services may not work particularly not as intended by the buyer. Obviously these disclaimers can be harsh and may be contrary to the customer’s reasonable expectation. For this reason the disclaimer must be “conspicuous” by font size or color or other emphasis. Limiting warranties, along with limiting remedies, local (here, Arizona) law and jurisdiction is one of the four things every business contract should have. (Often they don’t). Again, definitions and disclaimers of warranties are very important in business contracts, especially with the sale of goods, because without them under the Uniform Commercial Code (UCC) warranties may be implied into the agreement

Maintenance Agreements

Maintenance agreements often accompany or follow a sales or supply agreement under which a piece of equipment is leased or sold and the customer signs the maintenance agreement to have the equipment serviced and repaired as necessary.

Management Agreements

The term “Management Agreement” usually refers to an agreement between a property owner and licensed property management company. By statute property managers have specified duties and the management agreement should be carefully drawn to express these duties in the management of the property and handling of funds. “Management Agreements” are also a type of agreement used in the entertainment industry where a company or person manages the affairs of the artist. In some states like California the manager must have a license to perform this function.

Members Buy-Sell Agreement

(See Buy-Sell Agreement, supra).

Membership Interest Purchase Agreement

This is an agreement by which one buys (and someone sells) ownership in a limited liability company. “Membership interests” are the LLC equivalent of shares in a corporation. A membership interest purchase agreement can be used to sell the entire company – by selling all of the interests therein – or just a part of the company, where one member sells all or part of his interest in the LLC.

Minutes

“Minutes” are the written notes of meetings, most particularly in the business law context of the shareholders or board of directors of a corporation. Minutes do not have to be drawn as a lawyer would prepare them –although having a lawyer do them is fairly inexpensive. But they are required by the corporation statues. Under the case law a business which does not prepare and keep such Minutes (which is virtually all small and medium sized businesses) risks losing its veil of limited liability, i.e. its owners could find themselves personally liable.

Non-Competition Agreement

Non-competition agreements are often used in three contexts: with employees, buying a business and perhaps as part of an intellectual property or license agreement. In the employment context non-competition agreements are used to protect the

business from an ex-employee who may target the business’ customers and employee for sale or hiring or seek to sell the same or similar product or service in the same market. In buying a business the promise of the seller not to compete against the buyer is crucial because much of the value of a business is the good will the seller created, not to mention the seller would have the advantage of great knowledge and experience if it were allowed to compete. In the realm of intellectual property the non- competition agreement would be the agreement of the user or developer of the IP not to use what it has learned to compete against the other party after termination of their agreement.

Non-Competition and Non-Solicitation Agreement

Such agreements typically have three or four components: The promise not to target the business customers following employment; the promise not to solicit company employees post-employment; the agreement not to take direct or indirect actions to compete with the company during or after employment in the same market for a specified period of time; and the covenant of confidentiality, i.e. not to use or disclose company secrets.

Non-Disclosure Agreement

Also commonly referred to as the NDA, the non-disclosure agreement is used by persons or companies to protect their ideas or technology from disclosure or use by a party receiving such information, usually incident to a potential transaction between the disclosing and recipient parties. If what you have to say is secret and has value, then you need to have anyone you tell about the secret or your plans for the secret sign the NDA before you share that information.

Non-Solicitation Agreement

A “non-solicitation agreement” is the employee’s (or contractor’s) agreement not to target firm customers or employees following employment. This is very valuable because without this agreement the employee is free to do so unless the employee does so in an improper manner, e.g. in sales to customers, by “selling off of” confidential information and pricing learned from the former employer. Non-Solicitation and Non-Competition Agreements are among the most vital and often overlooked of business owner contracts.

Offering Circulars

This is the old name for the franchise disclosure document discussed above. The term is also commonly used to denote a summary of information about a prospective sale of securities.

Operating Agreement

The Operating Agreement is part of the LLC package. It is required by banks to open the business bank account. Where the limited liability company has more than one owner, the operating agreement is critical because it is the “money and power” agreement. It states who owns what interest, what he/she gave or must do for that interest, how the company is managed and the nature and extent of the management authority.

Property Management Agreement

A property management agreement is an agreement between a property owner and licensed property management company. By statute property managers have specified duties and the management agreement should be carefully drawn to express these duties in the management of the property and handling of funds.

Property Maintenance Agreement

A property maintenance agreement could include cleaning and upkeep, handyman duties (as discussed above) or significant repair and maintenance. If the work involves remodeling and prices exceeding certain low limits, say $1000 (see Handyman Agreement above) , then (in Arizona) the party performing the work should have a contractor’s license.

Power of Attorney

A power of attorney or “POA,” is the right of one party to act for another, usually because of absence or illness. A power of attorney may be “durable,” i.e. used in case of death or incapacity, for heath care directives, or for business transactions. For commercial transactions the POA may be broad so as to grant authority for all kinds of actions for a long period of time, or “limited” to a specific transaction and time, e.g. “to buy that house, next week.”

Private Placement Memorandum

A private placement memorandum, often referred to as the “PPM,” is used in the private offering and sale of new securities. Under Regulation D the PPM itself may not contain a general offer; rather it is a precursor to the offer. It describes the nature and amount of the securities offered, the nature of the investment, e.g. a new or expanding business venture, and the risks involved. It may also include financial projections as the governing statutes provide a “safe harbor” against liability for reasonable projections in this context. The PPM is critically important in any deal which size merits its cost, not just because one may violate federal law and be in trouble with the SEC and state securities departments for not providing one, but because a PPM is the best defense against lawsuits by disappointed or disgruntled investors. The same investor who sings your praises today may sue you tomorrow. This is human nature. A well drafted PPM with a well thought out list of risks (risk factors), especially including those   specific to this investment, is the   best defense   against claims of non-disclosure   and misrepresentation. Typically, a PPM is numbered and issued by name and number to each individual potential investor, so the investor cannot say he did not receive the PPM or did not know what it contained. (By law the investor is charged to read and treated as if he had read the document.) While a PPM is relatively expensive, it is less expensive than the attorneys fees needed to defend an investor lawsuit. Its cost may even be less than the “initial retainer” required to defend such an action.

Releases, injury

A “release” means a relinquishment of a legal claim. It can be in advance, like the “Liability Waiver” discussed above, or after an injury as part of a settlement of claims. See Release and Settlement Agreement below.

Releases, likeness

A release for use of likeness is a standard document firms or photo- or video- graphers may require before taking or using someone’s likeness. “Likeness” in the legal context is broad; it means not only what one looks like, but also what one sounds like, or acts like. While a public figure, like Paris Hilton – who is famous for being famous- may surrender the right to object to someone downloading her picture, she retains the right to object and seek compensation for its mass distribution. Recently, the firm had a potential client whose entire business model was predicated on using photographs and videos of various celebrities without seeking permission to do so. This was a fundamental error, which if not caught by the firm, could have caused multiple and large damage claims against the client who was seeking to establish an international internet gambling site. (As an aside, many new business models raise legal issues, e.g. Tesla selling direct without a dealer network – illegal in most states – or PayPal, which did not break any law but which I understand unknowingly caused merchants using its service to breach their contracts with their credit card companies.)

Release and Settlement Agreement

The settlement of any legal dispute, especially one that has made it into litigation, is typically done by means of a Release and Settlement Agreement (or Settlement Agreement and Mutual Release) which states what each party is getting, giving and claims (usually all claims) it is “releasing,” i.e. giving up as part of the agreement. Although one may reserve the right to assert any and all of the former claims in the event of breach of the settlement agreement, it is much more common for the settlement agreement to eliminate the old claims forever. In that case a breach of the release and settlement agreement, e.g. by not making the payments required, would lead to a claim for breach of contract, not a rejuvenation of the old claims, such as defamation or personal injury.

Sales Agreement

Sales agreements, just as the name implies, are for the sale of goods or services – in this context by a business. (This includes the “Terms and Conditions” of a Website). Contracts should be tailored to the business, its products or services and its customers. Every business person knows that the Sales Agreement states what is being sold, the price and terms. But commonly overlooked are the extremely useful, valuable and inexpensive things the law allows one to do in a business contract. These include the “Four Things that Every Business Contract Should Have,” which are the clear statement or disclaimers of warranties, limitation of remedies, home state law and jurisdiction (i.e. place of suit) and perhaps, arbitration. Disclaimers of warranties and limitation of remedies clauses are discussed above. The most important thing to know about the sales agreements used by most businesses, large and small, is that they are usually awful and waste many opportunities and protections the law would allow. Clients often like to talk about “asset protection.” Asset protection starts by getting paid; otherwise you are wasting resources. (For more on this subject please see my article “

The Falsity of Forms, Ten Things You Need to Know about Business Contracts.”

A copy of this article should be available on this site, or you may obtain a copy from the firm at [email protected].)

Sales and Maintenance Agreement

Sometimes the Sales (or Supply) Agreement will be combined with the Maintenance Agreement (discussed above) into one contract, e.g. the installation of water treatment equipment with regular inspection, maintenance and repair included in the package.

Sales and Service Agreement

The Sales and Service Agreement is essentially a variation of the Sales and Maintenance Agreement except the Services offered and agreed to may not be for the repair or maintenance of the equipment sold, but, rather, to provide consulting or other work in addition to that required for the equipment itself, e.g. the sale and installation of some computer equipment combined with consulting on all technology issues in the company.

Sales Forms

Sales forms are fine to take orders and acquire contact and billing information. But a sales form should not be considered a “Contract,” (with a capital “C”), which would be tailored for the business.

Sale of Goods Agreements, US

The sale of goods (e.g. tables, chairs, equipment and software) in the U.S. is governed by the Uniform Commercial Code (commonly UCC). Special rules for acceptance and damage claims apply and should be incorporated by word or reference into the business sales contract. One rule often overlooked is that under the UCC in the sale of goods between merchants (i.e. businesses who routinely sell or handle goods of that type) a buyer who does not accept the goods as delivered must state to the seller with particularity what is wrong with the shipment and provide the seller the opportunity to cure.

Sales of Goods Agreements, International

In contrast to domestic sales which are covered by various states’ version of the UCC and case law, contracts for the international sales of goods are covered by the United Nations Convention for the International Sale of Goods, commonly referred to as the “CISG.” While the CISG has much in common with the UCC, there are some important differences: Under the UCC contracts are easier to form than under the CISG. The CISG does not require “perfect tender” of conforming goods as the UCC does. And the CISG (and European law in general) is more geared towards fixing the contract, i.e. making the deal work. With any international transaction you have the special issues caused by translation; the variations in the meaning of the same terms between languages; local acceptance of various contract terms, e.g. in Australia there are no exclusions of warranty and in the Netherlands there are no consequential damages; the different ways of doing things, e.g. the Germans are very precise and will want to define even commonly used terms, such as “substantial” or “material”) and determination, if not disagreement, over which language shall be the governing language, e.g. whether the contract in German or English shall be the definitive version.

Sales Contract

(See Sales Agreement, above)

Security Agreement

(See Chattel Security Agreement, above)

Security Purchase Agreement

A security purchase agreement refers to an agreement under which one buys or sells a security, i.e. an interest in the assets or profits of a business enterprise. The agreement may contain various disclaimers, e.g. stating that the offering has not been approved by any government agency and is not represented or warranted to be suitable as an investment for the buyer. The agreement may also include the purchaser’s averment of his qualifications to buy the security, and ability to handle the loss of the investment, as well as the purchaser’s acknowledgement of the risk. This is one of at least three documents, along with the Investor Questionnaire and the Private Placement Memorandum that the company should use to approach and offer securities to company investors. When selling an interest in a new or established company it is important to have legal representation. Securities law applies, prohibits or regulates much conduct that with other sales would be perfectly normal and the penalties can be extreme.

Service and Maintenance Agreement

(See Sales and Maintenance and Sales and Service Agreements above)

Settlement and Release Agreement

(See Release and Settlement Agreement, above)

Service Agreements

This can be for maintenance, or additional services, or services by themselves, e.g. a consulting agreement. See Maintenance Agreement, Sales and Service Agreement above.

Service Contracts

(See Service Agreement, above)

Shareholders Agreement, Formation

In contrast to the shareholders’ agreement dealing with events like death, disability and divorce, this formational agreement is used to set forth the initial, underlying agreement between the incorporating parties. In this form the shareholders agreement is somewhat like an operating agreement for a limited liability company. It states who owns what shares, what they gave or must do for the shares, voting rights, dividend rights, employment rights or duties, and other agreements among the parties. It may also include provisions of the Shareholders Buy-Sell Agreement discussed below.

Shareholders Buy-Sell Agreement –Transition

This form of Shareholders Agreement is a buy-sell agreement among shareholders dealing with events such as shareholder death, disability and divorce. (See Buy-Sell Agreement, above)

Shoot-Out Agreement

A “Shoot-Out Agreement” is a mechanism to accomplish “business divorce;” that is, the separation of two company owners or blocks of same. Under this agreement the parties agree in advance, in writing, to a procedure of coin toss, the right of the coin toss winner to state a price (per share or interest or per block of shares or percentage interests) and of the responsive party’s right to say “buy” or “sell.” If the purchase is not to be for cash, then the preliminary “shoot out agreement” will include the agreed upon terms of purchase and sale, e.g. 20% down with 60 months to pay at prime plus 1% interest. The logical and ethical “beauty” of this system is that the system itself keeps the parties in check. If the first party says a price that is too high, then the responsive party will say “sell” leaving the first party committed to paying the high price stated. Conversely, if the opening price is too low the responsive party will surely buy.

Software Agreement

A software agreement is a form of intellectual property agreement. This term is somewhat generic and overbroad because the software agreement may set forth the terms for the development of particular software for a particular customer (see Intellectual Property Agreement, above), it may be an agreement between developers to develop software together and define each party’s role in the process, or a license agreement under which a party pays for the right to use certain software in various applications or operations.

Software Development Agreement

As set forth above a software development agreement may define the scope of work, deliverables and price for the development of particular software for a particular customer (see Intellectual Property Agreement, above), or it may be a “joint development agreement” between developers to develop software and define each party’s role in the process.

Software Joint Development Agreement

(See Software Development Agreement above)

Stock Purchase Agreement

A stock purchase agreement is for the purchase of shares in a corporation. It can be of at least two types: one, to buy all of the shares of a corporation from another or other shareholder(s), or, two, to buy just some shares in the corporation either from the company or other shareholder(s). Generally, any such purchase and sale must be approved by the remaining shareholders, i.e. shareholders not-involved in the transaction.

Stock Pledge Agreement

A stock pledge agreement is used for the party to a loan (usually to purchase the corporate stock of the company in question) to use the stock as collateral for the loan. This is typical where corporate shares are purchased under a loan with installment payments.

Sub-Contractor Agreements

A sub-contractor agreement is used by the prime contractor on the “prime contract” (i.e. the contract with the owner or person ordering the work done) to hire various specialty contractors to perform certain component parts of the overall project.) In construction, particularly under government contracts, the sub-contractor agreement can be quite involved with extensive provisions governing the time, place and manner of work, clean up, change orders, etc. A major issue now arising under such contracts is whether a “pay when paid” clause is enforceable. It is not unusual for construction contracts to state that the contractor will pay the “sub” when the owner or hiring party pays the contractor. The problem arises when the owner does not pay the contractor or is very late in doing so. In Arizona, by statute, and in other jurisdictions by case law, “pay when paid” does not mean the sub must take the risk of the prime contractor’s contract. Rather, “pay when paid” means payment within a reasonable time, whether or not the contractor is paid under the prime contract.

Team Agreements

Team agreements are becoming increasingly popular as a way for companies who may in some ways compete, but which in other ways complement each other in marketing, resources and skills to combine their presentation or performance on a project. For example we have a client with multi-state resources who does not have minority- or woman-owned business certification. Under the parties’ team or “teaming” agreement each may bid on jobs and do business as usual, but also either company may bid appropriate jobs as a team. The party bidding the job puts its name first and if awarded the job, serves as the team leader for that project.

Technology Agreement

Technology Agreements come is all “shapes and sizes.” They may include the contracts for the development of software made to order for a particular customer, the joint development of software as part of product development or the transfer by license or sale of chip design, production process, or other technology. Whatever their form technology agreements can be complex with tranches of work and payments and should be drawn by an attorney.

Terms and Conditions

“Terms and conditions” in the most basic and general sense are the content of contracts, which if accepted by the parties become part of a binding agreement. But, the most common use of subject heading “Terms and Conditions” today is to denote the terms stated on a company Website to which the user must agree to access and use the Site. Terms and Conditions, like Sales Agreements or Sales Contracts in general, should be carefully drawn and tailored to the business. Often the company’s Sales Agreement and its website Terms and Conditions can be essentially the same; thus, the client can get “two for the price of one” by having its attorneys draw up a sound agreement. The important thing is for the business to define what it will and will not do, and not be responsible or liable for as well as what the Site visitor will, can or cannot do or hold the Site accountable for.

Trademark Agreement

Trademarks include both names and logos. A business may acquire common law rights to and for use of a name by using it, but generally the best practice is to register both the word and logo as federal trademarks. This is important for protection from others who may claim prior rights to the name and well as to control the identity comprising the client’s brand. Due to their importance and to avoid confusion of rights and the use of company trademarks by others, e.g. distributors or dealers, is important to control the use of the name by a trademark agreement.

Trademark Licensing Agreement

A trademark license agreement, among other things, identifies the Mark(s) to be used, the upfront or ongoing royalty fee to be paid for use of the Mark(s), and secures the licensed user’s acknowledgment that it is acquiring no rights in the Mark and must cease using same when the agreement expires or is terminated.

Trust

A trust is created by a trust agreement by and under which the grantor establishes and commits funds or property to the trust by transferring legal title to the designated trustee. This can be the grantor himself or a third party neutral, such as a trust company. The beneficiary of the trust has equitable title to the “res” property held in trust. Trusts are useful in estate planning as well as asset protection, the latter because they remove the property from personal ownership and control as well as collection and execution by creditors. (See Asset protection Trust or Domestic Asset Protection Trust above.)

UCC -1 Financing Statement

Under Article 9 on “secured transactions” of the Uniform Commercial Code (UCC) a lender or other creditor may be granted by the debtor and take a “security interest” in personal property, i.e. things moveable at the time of the transaction like tables, chairs and equipment as well as accounts, after-acquired property and proceeds. The debtor’s grant of a security interest in the collateral is “perfected” upon the filing, usually by the creditor, of the UCC-1 Financing Statement with the Secretary of State (in Arizona). Also, it is the filing or recording of the “UCC-1” that gives official notice to the world, especially including banks or other lenders, that there is a prior lien on the property.

Waiver

A “waiver” is the voluntary relinquishment of a known right. (See “Liability Waiver” or “Release” above.)

Website Terms and Conditions

(See Terms and Conditions above.)

Whatever You Want Agreements

This isn’t really the name of an agreement. I am just making the point that virtually anything that can be conceived and agreed to can be “memorialized” in and by a written agreement. Just let us know what you need at [email protected] or at [email protected].

What others are saying about us
  • "I would recommend Mr. Hudspeth unequivocally. Not only is he an outstanding business attorney, he also provided me with access to a divorce attorney. Thanks to his skill, and resources available outside the Phoenix law family, I was successful in challenging a “family law” mediation that was particularly and grossly unfair." - Chandler, Arizona Private Individual

  • "Thank you for the work you have done in creating these documents. It is always a pleasure dealing with this firm!" - J. P.

  • "An excellent response. Masterfully prepared. Thank you." - El Paso, Texas Real Estate Investor

  • "Glad about meeting with Don. Felt so much better, better than in 15 years. Really appreciated the conversation." - RH, Phoenix Manufacturing Company

Donald W. Hudspeth Attorney Photo
Donald W. Hudspeth
Principal Attorney

Attorney Donald W. Hudspeth has more than twenty years’ experience practicing corporate and business law. Before attending law school, Mr. Hudspeth held a stock brokers license at the age of 21 and owned his own business at the age of 23. He was a business law professor at Arizona State University, West Campus, and has conducted classes and seminars for a number of higher institutions and organizations. Mr. Hudspeth has published two books on law and is the founder of the radio programs Law on the Edge and Law Talk.

Mark S. Hamilton Attorney Photo
Mark S. Hamilton
Attorney

About Attorney Mark S. Hamilton has experience handling all aspects of civil and commercial litigation in federal, state, and tribal courts at the trial and appellate levels. Practice Areas Business litigation Commercial litigation Education University Of Hawaii Wm. S. Richardson School Of Law, Juris Doctor - 2002 University Of Hawaii, Master Of Arts In Asian…

  • Preeminent AV Rated
    Client Distinction Award
    Bar Register
    AV Rating
  • The Arizona Republic
    Newsweek
    Arizona Sate University
    Top Rated Lawyers
  • Client Champion
    McAfee Secure
    Lawyers Of Distinction
    2020 issue of AZ Business Leaders

Our firm now offers a scholarship program for ASU first and second year law students.

The scholarship is awarded to students for academic merit with an interest in business and business law. Candidates may have majored in fields other than business, have taken a break between college and law school, or have had exceptional life experiences.

Pay Your Bill Online

Use our easy-to-use and secure online payment feature to pay your bill. We accept all major credit cards.

Pay Your Bill

Contact us

Quick Contact Form