As a business owner, you are no doubt very busy: you are building your brand, perhaps considering applying for applicable trademarks, contracting with clients and vendors, or even considering selling or buying a business. Some of the small details associated with these events can seem trivial and unnecessary. When clients approach business lawyers with these situations, they sometimes ask about certain aspects of the processes: “Is this necessary? Can I just skip it?” I will detail in this post a few such scenarios that might be helpful to consider when you face these situations in the life of your own business.
One example is the trademark Preliminary Screen, which I wrote about on the blog last month—not necessary for filing a trademark application, but often very helpful for the reasons I suggested in the post. Can you skip it? Yes, but if you choose not to skip it, you might save yourself some headaches later.
Another one? Corporate Resolutions. We wrote about those on the blog previously, but as a quick recap, a Resolution creates a formal written record of a decision made collectively by the Board of Directors or Members of a company, such as approval for the sale or purchase of a business. These Resolutions can be done without a meeting (as long as relevant company documents do not preclude that in writing) and they need to contain relevant information about the company, about what is being approved and by whom, and a clear statement that this document formally allows the decision or decisions. These Resolutions may feel unnecessary and skippable, a small cog in a much larger machine, but consider the situation in which there is an issue with a deal. If your deal reaches that boiling point, you will likely regret not formalizing the decision-making process. In the case of a dispute—a deal gone bad, or something remembered differently by individuals within the company— you cannot ask a business entity what its intention was in doing a deal. If you have no record (in the form of a Resolution), then it has hard to have an objective intuition for the intention of the company. In contrast to the previous example, it is less discretionary, and certainly not advisable, to skip this step.
One last “can I skip it?”— including certain details in contracts. Since the law around contracts largely hinges on the rights of parties to contract on their own reasonable terms, parties are free to contract as much or as little as is necessary to find agreement between the parties. Sometimes it can be tempting to leave out terms from the contract to decide later— you may lean on a good relationship with the other party to work out decisions in the future—but supplementing contract terms after signing can be complicated in the case of a later dispute. Courts don’t like to look at terms not agreed upon as part of the contract. Thus, it is smart to be careful before skipping inclusion of certain terms into a contract that you aware before signing could create an issue; it is wiser to always plan for the possibility of “the worst of times”.
In sum, sometimes taking certain actions related to the process of business deals and legal work may seem unnecessary in the moment, maybe a bit of a “cross that bridge when I get to it” situation. Fortunately, your friendly neighborhood business lawyers are happy to look ahead to the bridge that may need to be crossed in the future to help advise you on steps you can take now that create less hassle down the road. Thank you for reading.