7 of the most common, everyday contracts for SMEs

Posted by / May 26th, 2015 / No responses

We’ve been out and about a lot recently, meeting new people around Yorkshire.

We often get told “you don’t look like lawyers!” and then the next question is usually “what exactly is it that you do, then?”

It’s a hard question to answer quickly (darn you, elevator pitch!) because we offer a wide scope of legal services for SMEs. But we don’t want to reel them all off,  because you’ll snooze off and later kick yourself for being lured into a dull conversation with a real, actual business lawyer.

So the answer we generally give is “we’re commercial contract gurus – we check and draft your everyday contracts to keep all your business deals healthy.”

Certainly, commercial contracts are a big part of what we do and one of the things we’re brilliant at.

So this blog is a quick list of the 7 most common contracts we help our small-medium business clients with – have a look and see if you’ve got them all covered.

1 Shareholder Agreement 

If your business is set up as a limited company then we highly recommend you get yourself a shareholders’ agreement. We’ve seen too many disputes between “founding friends” who ended up needing to go their separate ways from the business and falling out over it. In simple terms, this contract will cover how you and the other shareholders operate. It can be as detailed as you like, but some basics include setting out clearly what shares you own, in what amounts, and what rights you each have to make key decisions. What happens if someone wants to sell their shares (pre-emption rights/rights of first refusal. How any future or capital financing arrangements will be put in place. Key roles, responsibilities or important governance.

“We don’t need all that malarkey, we’re best of friends” we hear you cry. We say: think Jaggers v Richards. Simon v Garfunkel, Noel v Liam, Lennon v McCartney.


2 Investor Agreement

This one’s easy – because if somebody new is putting money into your company they’ll want it properly written down. You’ll need to capture number of shares and the value, what decision making power that will give them, how they can sell their shares on in the future and what role they may be expected to play in the day to day of the business.  Of course this is all super important to you too, as you’re giving away a piece of your “baby”. Time spent now talking through the expectations with your investor is worth its weight in gold. It will also throw up any red flags or uncomfortable feelings about having this person/company on board for the longer term. Listen to your gut instinct and DO NOT sign anything you are unhappy with.

3 Employment Agreement


Yep, it’s time to be a responsible employer. It doesn’t need to be a complicated exercise, and taking on the right people is essential to growth so don’t delay. But do get the basics right – and a jargon-free employment contract is important to both of you. There’s all sorts of things which can go wrong down the line, so the contract will help to put simple processes in place.  How they need to manage confidential information/data, termination rights, health and safety, access to discplinary rights, pensions (remember – auto enrolment takes effect this year). Get it all in writing – the more detail you can include the better. Pay, holidays, sick pay, hours of work, training, expectations around ways of working, access to benefits, performance monitoring, bonuses. Your employee will feel better for having a solid understanding and the relationship gets off on the right foot.

4. Trading Agreements


Well, a trading agreement comes in many shapes and sizes and can be complicated and headache-inducing – but this is where we come into our own. We’re specialists in getting the detail of your deal down on paper and making sure your business is protected. This includes licenses, distribution agreements, partnership agreements, IT delivery, e-commerce or manufacturing agreements. We’ll make sure all the basics are in place, identify the risks and then ask the right questions to get you and your trading partners on the same page.  The vast majority of disputes between business to business arise from inadequately drafted contracts, or situations where one party has failed to read or understand the small print. Don’t mess around with contracts, especially not when you have an easy, cost effective contract checking solution right here. No excuses. [Lecture over]

5 Contracts for trading online

Your website needs some key contracts on display for potential customers, and in particular one to cover online transactions. We recommend including bespoke policies on Data, privacy, Cookies and (if relevant) cancellation policy. As a matter of good practice, it’s best to include a “way of operating” so your customers know the relationship which will take place between you. Of course, you can just find some Ts and Cs on the internet and plagiarise/mess about with them to create your own. But for a very small investment you can get your own Ts and Cs for online trading which are bespoke to your business and how you operate. You do the math.
6. Software Licences and Agreements

In this modern age we are all using software to get us the technology we need. If it’s off the shelf packages, you need to make sure you’re buying the genuine article and you know how long you are tied in for and at what price, and you understand your rights to use it. If you’re paying a software developer to create something bespoke then please get the detail in writing. Many a dispute comes about because development timelines slip, the parties disagree on what was in scope, or there may be problems in final testing or presentation of the end product. We’ll make sure to capture price, delivery dates, payment and development milestones, sign-off points, IP ownership, future service levels and responsibilities for maintenance. It’s likely that this will be a key investment for your business so get it right, first time.

7 Confidentiality Agreements

This is the Digital Age and protecting your ideas and inventions is more important than ever. It’s so easy to share information quickly via cyberspace and not realise that you are giving away the gold of your business. This is not just the obvious stuff like protecting your patents or copyright – it includes all information essential to your business, such as financial information, training materials, R&D projects and your employee’s designs. A client came to us recently complaining that a major company had launched a product which was an exact replica of an prototype he had pitched to them a year earlier. He had not signed a Confidentiality Agreement before disclosing the idea and it proved impossible to prove the provenance of the idea (though we did try). It was a hard lesson to learn and painful for us too, as we knew we could have prevented it had we been involved from the get-go. Don’t make the same mistake – engage legal advice early, make sure you use a Confidentiality Agreement before you release precious information, and also make sure you understand your obligations before you agree to access someone else materials.

So there we go. Seven types of contracts we help our SME clients with every day.

There’s plenty more to share, but we’ll let you go before you snooze off.

You know what to do next time one lands on your desk. Talk to Serenwood.

hello@serenwood.co.uk or call 0113 225 2110.