Today’s blog is about the most fundamental issue in contract law: do you actually have a contract? While this might seem like a no-brainer, you’d be surprised at how many sophisticated businesses file lawsuits to dispute particular terms in a “contract” only to get the unpleasant surprise that the disputed terms are moot because there was no legally enforceable contract at all. Here are the necessary elements of a legally binding contract.
I just returned from attending the ConnectWise Partner Summit that was in Orlando this past week. In attendance was over 1400 IT service providers from around the world that focus on managed IT services as their key practice. The bond that connects us is that we all use the ConnectWise Professional Services Automation (PSA) tool that help us run our businesses and provide these services to our clients.
Taking shortcuts with your business and legal strategies can get you in trouble. If you are an out-of-state company doing business in Texas, you are a “foreign corporation” that must register with the State of Texas and acquire a certificate of authority under the Texas Business Corporation Act. While some companies may consider shortcutting this requirement, failure to register your foreign corporation will have costly consequences.
Business owners solve problems every day—changing a strategy, deciding how to enter a new market, and fixing problems with the launch of a new product. Some of these problems are created by our industry, or competition, or our processes. Some just “happen.” And others – well, if we’re honest, we’ll admit we’ve caused a few of them ourselves.
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The old adage “time is money” is nowhere more true than in the tech industry, where it’s often more advantageous to buyout another company for its technology instead of investing time and money in an in-house development project. Due diligence is generally a process oriented around discovering information about a target company and its technology, but it’s also a delicate process that must be structured defensively to protect a prospective buyer from future litigation.
A prospective buyer takes on great risk in the due diligence process. The process provides the buyer with a wealth of knowledge about the target company’s trade secrets and other confidential information. Where the buyer decides against acquisition, the target company might sue for willful misappropriation if it believes that the prospective buyer later infringed upon intellectual property revealed in the due diligence process.
To guard against future lawsuits and to fortify available defenses, prospective buyers should design and implement multiple mechanisms of “defensive due diligence.” The first step in this process is to define the essential goals of the acquisition, specifically identifying the scope of the technology that the buyer wishes to obtain and the purpose that technology will serve for the buyer. Providing this limited focus for your due diligence team will prevent inadvertent discovery of extraneous confidential information that might later become the subject of a lawsuit.
The second step is for the prospective buyer to identify and document all of its own prior or current efforts to develop technology similar to the other company’s targeted technology. Thorough documentation of the buyer’s concurrent technology development will provide the front line of defense in a lawsuit alleging that the prospective buyer misappropriated the target company’s intellectual property.
A third and critical step is to plan the methods of holding, transferring, and communicating the acquired information among and between due diligence team members. This is imperative to protect the information from leaking outside of the due diligence team. Also, if the prospective buyer decides against acquisition, all confidential information must be destroyed – a daunting (and sometimes impossible) task if the document management and communication systems are not strictly structured and implemented.
As with any endeavor, a business seeking to obtain technology through merger or acquisition must “look before it leaps” to safeguard against future legal woes. While a large part of the due diligence process involves an “offensive” strategy of discovering a target company’s weak points, it’s also important to have a good “defensive” game, too. A comprehensive defensive due diligence strategy that includes the three steps outlined above can prevent many future lawsuits from emerging and can provide the elements of a strong defense when litigation rears its ugly head.
Large construction projects come loaded with latent risks that could lead to project failure or excessive cost due to the interdependent relationships of material suppliers, sub-contractors, general contractors, architects, and engineers. Some of these risks may be mitigated through no-cost contract and process controls, while other risk management methods will inevitably add expense to your project. The best strategy to protect your project against failure or runaway costs will likely include a combination of techniques, including some of the methods described below.
I must first admit something – I am a techie guy. I like to see new technology and figure out how it can be applied to solving real problems. Now that I have admitted that – I talk with lots of executives who struggle with technology and some who even tell me “business was better in the old days when we didn’t have computers and high tech.”
Business Owners, do you share any of these frustrations?
Having a current and detailed cash flow forecast can mean the difference between thriving and closing your doors in a rough economy. Even in a fast growing business having a strong cash flow forecast can mean insuring that ever changing working capital needs will be met.