No-Nonsense Advice about the Perfect 1-Page Agreement
By Nina Kaufman, Esq.I have met a lot of entrepreneurs who proudly tout their one-page agreements like they have found the Holy Grail of business contracts. But that’s rarely the case. Sometimes, 1-pagers are more like Dixie® cups: inexpensive, designed for uncomplicated situations, and if you drop one on the floor, it won’t make too much of a mess. However, if you step on it, the cup crushes underfoot.
Think about it. There are only just so many “what ifs” that you can physically fit on a single side of 81⁄2″ x 11″ piece of paper using a reasonable font size. And what usually gets left out of the one-pager is the “elephants” – the big, huge, dark, and threatening issues that can cause enormous harm, like confidentiality and intellectual property violations. When they arise and your agreement hasn’t addressed them, it’s like an elephant stepping on a Dixie® cup. You get flattened.
My friend Sarah provides public speaking training to corporate executives. She swore by her 1-page agreement until recently, when she learned that a company she had worked with took the materials she had provided to the executive group and sent them around the whole company, providing her training modules, with them too! When I looked at her agreement I saw right away what it didn’t include: among other things, the ability to resolve disputes in Sarah’s home state, an acknowledgement by the company of the limited use of the materials (and compensation if there’s further use), and the right to recover attorneys’ fees in a dispute. I asked Sarah (as gently as I could) why she hadn’t included these terms and she said, “I don’t know – I didn’t think of them . . .and didn’t think I needed them. After all, I’m only a small company. I really wanted the business and didn’t want to send this great, big agreement to the company with all the legalese-y gobbledygook. It might have turned them off.” It didn’t take long for Sarah to weigh the benefits of a one-page agreement on the one hand and the drawbacks of having her intellectual property ripped off, on the other. Her standard agreement now clocks in at a hefty 3-pages.
Let’s look at some of the “elephants” that are often omitted from one-page agreements and why they may be significant to your business:
* Confidentiality: Are you providing your confidential information to someone else? Maybe you’re working with a strategist to help develop a business idea and then the strategist turns around and uses it with a better-capitalized colleague. How would you like it if they swiped it? Or used it for their own ends?
* Intellectual property — copying: What are the specific uses that you are permitting for the creative work you provide? For example, Sarah could have limited her presentation handouts to the executive team, and not for circulation within the company. Will you permit copying? Or taping of a presentation?
* Intellectual property – other uses: In the course of your work, you may be generating ideas or deigns for a client. What happens with the ideas that the client does not choose? Have you made sure to retain them for your use with other clients?
* Resolving disputes: Sarah often traveled outside of her home state to provide her services. If a lawsuit arises with your client, who is located outside of your home state, where will you resolve it? (Note: very often state rules require that you bring the lawsuit in the state where your client is located, not where you are located)
* Indemnification: A client provides you with its marketing materials. Unbeknownst to you, the client largely lifted them from a competitor. When you incorporate them into the presentation/ad campaign/something public, the competitor sues you. Do you have language in your one-pager compelling the client to step in to help you (and especially, to pay for your legal fees) in this kind of situation?
* And speaking of attorneys’ fees, what happens if your client isn’t paying you and you have to sue to collect? Paying for a lawyer to handle the case adds to the amount that you are out of pocket already. And courts don’t often award you those costs in a lawsuit. But you could recover those fees if your agreement provides for it. The same goes for being able to charge interest on your outstanding invoices – often
These kinds of issues often require specific legal wording to protect you adequately . . . which you probably will not find from agreements you download from the Internet. If these issues are important to you (and if you’re in business, I’m sure they are), don’t leave them to chance. Make sure your agreements are reviewed by a qualified attorney. They may expand the girth of your one-page agreement, but they’ll withstand the weight of an “elephant”!
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