Andrew Flusche, Fredericksburg Lawyer

It’s important to protect your business. But do you always need a non-disclosure agreement to do that? No.

If you are going to share confidential information with someone, you need to ensure that they do not disclose it to anyone. But you should first ensure two things: 1.) you are going to share confidential information, and 2.) nothing else ensures confidentiality.

What is confidentiality?

Not all information is confidential. Thus, not everything needs to be protected by a confidentiality agreement.

Anything you share with the public isn’t confidential. But information such as financial data, customer lists, and business plans needs to be protected.

Other confidential protections

You never have to worry about your doctor sharing your medical information with anyone. That’s because he is bound by doctor-patient confidentiality. You don’t need to ask your doctor to sign a non disclosure agreement (NDA).

The same thing applies to lawyers. Your attorney is bound by attorney-client confidentiality. He cannot share anything that you reveal to him during the course of providing legal services to you. No need for a NDA.

Are you really going to disclose?

Even if your situation requires a nondisclosure agreement, think twice before asking someone to sign one. Are you truly going to disclose information to this person?

I’ve been asked to sign non disclosure agreements, only for the client to then decide not to hire me before actually disclosing anything confidential. That doesn’t make you look like a well thought-out business person.

Get a custom non disclosure agreement

If you end up needing a NDA, you should make sure it truly protects your business. There are many stock non-disclosure agreements floating around the internet, but they will not be tailored to your situation.

There is simply no substitute for hiring a business attorney to assist with your contract drafting needs. Your business is unique, and you need custom help.

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Aside from personal liability, another popular contract topic is e-signing. It’s a quick, legal way to execute your business and personal contracts.

E-signature law

The basic law of contracts is that a contract is binding if the parties agree to its terms. Signatures signal that the parties agreed. But you don’t have to sign your full name in ink on paper.

The federal Electronic Signatures in Global and National Commerce Act solidified the validity of e-signing your contracts. This Act basically says that electronic signatures are valid in the form that the contracting parties agree to. But the Act also allows you to opt out of electronic signatures.

Notably, some states have also passed laws regarding e-signing. But electronic signatures are essentially valid in all 50 states.

Echo-Sign

For my contracts, I love using Echo-Sign. With Echo-Sign’s software, I can send out a contract and have it fully signed by all parties in 5 minutes. It’s a great way to get e-signatures fast.

To use Echo-Sign, you just upload a document that you want signed. Then you input the email addresses for the people that need to sign it. When you’re ready, you simply click “send.”

Echo-Sign will email each person, asking for his/her signature on the document. Once each party has e-signed, Echo-Sign automatically emails a final copy to everyone.

If this isn’t cool enough, you can even review and sign contracts from a mobile device, like an iPhone, Palm, or Windows Mobile phone. If a client signs a contract while I am on-the-go, I get a message from Echo-Sign on my Motorola Q. I can quickly sign the contract myself without needing access to a regular computer.

Speeding up business

As you can see, electronic signatures are just one way to speed up routine business. They facilitate quicker contracts, which means you can get more agreements done in less time.

For a busy attorney like myself, e-signatures save crucial time which lets me focus on serving clients even better. Whatever your occupation, I highly recommend trying the free version of Echo-Sign. You’ll be glad you did.

Photo by El Fotopakismo

When you sign on the dotted line, do you understand who is actually liable on the contract? Here is what business owners need to know about personal contract liability.

Limited liability companies

A big legal benefit of limited liability companies is that the owners of the company are not typically liable on a personal level for the company’s contracts. Corporations are limited liability, as well as limited liability companies (”LLC”), and perhaps other business forms in your state.

As the owner (or principal or shareholder) of a limited liability entity, you need to make sure to bind your company on its contracts. You don’t want to inadvertently bind yourself on a contract, after you have gone to the trouble of setting up a limited liability entity.

Key words to watch for

There is no substitute for having an experienced attorney review your contracts and assist with any business deals. But you can educate yourself to watch for key words when signing.

Individually / personally - Any words like these should be a red alert. If the signature line says something like “Bob Jones, individually,” it means that you are signing in your personal capacity. You are agreeing to bind yourself to the contract. Watch out!

As / for - A well-drafted contract should show your name, your title, and your company name in the signature block. The words “as” or “for” should denote that you are signing “as” the president of the company or “for” the company.

Example signature blocks

To further clarify what to look for, here are two sample signature blocks.

Personal liability
Bob Jones
_______________

Company liability only
Bob Jones,
as president, ABC Company
_______________

Binding other people personally

Now that you know the basics of personal vs. company liability, you should be aware that you might want to bind your business partners or clients in a personal capacity.

If you are taking on a client who owns a small closely-held corporation or LLC, you should consider personal liability on the contract. The other party may not want to sign personally, but it can always be discussed in your negotiations. Binding your client personally means that you could have extra protection for your business, even if the client’s company goes bankrupt.

Be careful

As in all business dealings, caution is important. Even if you agree to everything a contract says, you must carefully analyze all the words before signing. Don’t bind yourself personally when you really intend to sign for the company.

Photo by Marc van der Chijs