On September 1^st David was honored to be a guest on the nationally syndicated The Small Business Advocate® radio show. Jim Blasingame and David discussed “Contracts, Intellectual Property, and Small Businesses; Can They Live Together in Harmony?” Use the players below to listen, and here are some highpoints.

Always think… who is the vendor in this situation? Am I buying goods/services, or am I selling goods/services? If you are writing the checks, yet signing someone else’s agreement, then you are doing things wrong.

A goal should be to establish a process that minimizing back-and-forth contract negotiations associated with each agreement. An effective way of doing this is through an online “vendor account” creation, or intake, process whereby the vendor enters their information and hopefully agrees to your terms of service). A great mantra would be “be fair and automate!” People don’t fight what is fair and simple.

If you onboard one new vendor a month, an off the shelf vendor intake management package will likely save you tons of time and money, while providing an aura of credibility and making an organized repository of what agreement each Vendor has agreed to and when it needs to be renewed. PLUS, if you were looking to purchase a business, how impressed would you be if they could easily produce information regarding each Vendor Agreement they have in place.

Back in 2007 Jim and I discussed what I identified as “The Single Biggest Intellectual Property Mistake of Small Businesses,” namely providing goods and services to big business and the associated contracts. People are surprised when an IP attorney doesn’t say the biggest mistake is failure to protect your inventions or failure to register a trademark to protect your brand, however these are not mistakes that will sink your business. Assuming ridiculous amounts of risk associated with signing a boilerplate contract can indeed sink your business, and often you won’t see it coming.

It is reckless for small businesses that blindly agree to the “Terms and Conditions” of their larger business vendors, customers, and partners. Ask yourself, would their standard agreement tend to favor them or me?

Additionally, small businesses that blindly sign such agreements are NOT respected by the larger business vendors, customers, and partners. While every company wants to be viewed as one that is “easy” to do business with, do it by exceeding expectations NOT by accepting risks that could sink your business.

Never sign an agreement just because someone says “any changes have to go through our legal department and will take weeks to get approved” or “we can’t change the terms.” Small businesses often have an inferiority complex… guess what – you would not be at the contract signing stage if they didn’t want to work with you!

Small business owners need to learn to spot the common risks in contracts. Start by simply searching all contracts for variations of the words:

1. indemnity / indemnification
2. warranty / warranties
3. remedy
4. claim
5. infringe
6. confidential
7. transfer
8. sole
9. all rights
10. will not

Additionally, watch out for:

1. Any URL’s in a contract referring to other policies and procedures.
2. Subsequent Purchase Orders containing conflicting 6 point grey-scale type on the back with stating something to the effect that if you start work, or cash a check, you accept the “Terms and Conditions” on the PO (and that the PO overrides other prior agreements). This is easy to avoid, if you handle it from the outset. After all, everyone wants to agree that any subsequent T&C’s are null and void unless agreed to in writing by both parties.

The bottom line is… develop a relationship with an attorney you like and trust, as it is not uncommon to reduce one’s risk by 50% with slight modifications to a contract.