When running a business, there is a range of documents that you may need for a variety of purposes. Many business owners attempt to minimise costs by using generic documents. However, this can risk damaging your commercial interests. This article will explain why it is beneficial to draft original documents specifically for your business rather than using generic templates or copies from other businesses.
Common Documents
Examples of documents businesses commonly use include, but are not limited to:
- contracts;
- deeds;
- terms and conditions;
- website terms of use;
- privacy policies;
- employment agreements;
- shareholder’s agreements; and
- partnership agreements.
Having such documents can help you set out a roadmap for your business moving forward. However, many business owners may choose to prepare their documents based on documents other businesses use. This is a tempting option for business owners who are often time-poor and attempting to minimise costs by managing their own legal affairs. While it may seem simple to base your documents on prior ones, this could cause serious problems for you and your business for a variety of reasons.
Tailor to Your Business
Written documents are very useful because they can be a point of reference. This is particularly necessary if any disputes arise between you and another party involved with your business.
Keeping this in mind, it is very important to prepare original documents tailored specifically to your business needs. For example, you may have drafted a shareholder’s agreement based on another company’s simple founder agreement. If your company is bought out by another competitor and your shareholders begin to sell their shares and leave the company, you may not have any provisions in your shareholder’s agreement to deal with this situation. This would be because a simple founder agreement would not generally make allowances for such complex matters.
For this reason, you must draft documents that respond to the specific needs of your business so that if any disputes, conflicts of interest or any other disruption to your business operation arise, you will have a comprehensible legal document to deal with the situation.
Continue reading this article below the formCopyright
In Australia, copyright is a form of intellectual property. In essence, copyright protects an expressed idea in its given form, such as a written document.
By preparing your own legal documents, you can control how the information you produce is distributed, performed, reproduced or adapted. Conversely, in basing your legal documents on the documents of another business, you will be at serious risk of breaching copyright laws. For example, you cannot use the intellectual property of another person without their consent under copyright laws. In doing so, you will have breached the other person’s copyright for which you may become legally liable. This is quite a serious issue, and business owners need to ensure that all the documents they use are original and do not infringe any copyright laws.
Maintaining Accuracy
When you create your own documents, you can ensure that the information embedded is accurate. While documents other businesses use may look professional and legally sound, there is a chance that the information is outdated or simply incorrect.
Using incorrect information in legal documents can cause significant legal issues for your business. For example, suppose you draft an employment agreement for a full-time employee based on an agreement by a company in another Australian state. Assuming that your business is based in New South Wales, the other company’s employment agreement may not include an accurate clause stating that all full-time employees are entitled to two months of paid long service leave after working with the company for 10 years. By using documents with inaccurate information, you may be at risk of either breaching laws or incurring unnecessary costs and losses.
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Key Takeaways
To operate a successful business, your documents need to meet legal requirements and be tailored to the needs of your business. For this reason, it is a great idea to invest a little time to prepare original documents that you can and may rely on in the future as a point of reference in case of doubt or any disputes.
Creating original documents for your business will provide a range of benefits. This includes:
- protecting the specific needs of your business;
- meeting legal requirements; and
- reflecting the right information.
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Frequently Asked Questions
Your business is unique and will have specific needs. Preparing your own documents allows you to tailor it to your business. If disruption or conflicts arise, you will have the necessary legal protection.
Failing to draft documents tailored to your business can risk your reputation and expose your business to legal action. For example, you can infringe copyright laws by relying on the documents of another business.
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