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The importance of contracts in business

Sumaiya De’Mar (the founder of SA Fashion Law) specialises in Intellectual Property Law and the fashion industry. Here she offers her insight into NDAs & T&Cs.

Sumaiya De’Mar (Photo: Eben Photography)

Every entrepreneur knows that business is about building key relationships and maintaining them. What sets the successful business apart is the way they do business, making sure all their bases are covered. According to the Harvard Law Review, one of the most effective ways to do this is to get proper legal contracts in place.

As a business owner, it is imperative to get into the habit of always using written contracts. It makes you look professional, your clients see that you are serious about doing business the right way and will be much more inclined to work with you.

There are many instances of business owners getting double-crossed after doing business on a handshake. The lesson to be learned is that written contracts should dominate every important relationship in business. Formal agreements set the tone of professionalism in doing business legitimately, which attracts the right calibre of alliances.

Let’s take the example of a Confidentiality or Non-Disclosure Agreement (NDA).

In every business, you need to disclose confidential information to someone else, whether it is to acquire technical assistance, financial assistance or marketing advice. Infringements occur when confidential information is disclosed without a written agreement in place – your ideas could be executed without you. A Confidentiality Agreement, therefore, allows you to explore the development of your concepts freely without having to worry about giving away your secrets and receiving a dagger in the back.

“A Confidentiality Agreement therefore allows you to explore the development of your concepts freely without having to worry about giving away your secrets and receiving a dagger in the back.” – Sumaiya De’Mar.

It’s so tempting to just do a quick Google search to find a contract template to use. But not only are there a lot of missing information, the law also differs in each country, which may render the contract invalid. Take the time to acquire proper legal contracts simply because it will protect your business.

Another example of a fundamental written document every business should have is its Terms and Conditions. Legal requirements vary, but the contents of the Terms and Conditions should essentially state what is expected by and from each party. The digital age has added to these requirements and it’s therefore important to make sure your terms are specifically written for your business. This could be produced as evidence in court if need be, so essentially, having written Terms and Conditions can protect your business.

It is crucial that entrepreneurs see the law as a way to reduce risk in all aspects of their business and to safeguard their concepts. SA Fashion Law offers a bespoke legal service tailored to the challenges of each business, which includes drafting contracts – including Confidentiality Agreements, Terms & Conditions, etc. The aim of SA Fashion Law is to bring formality to business transactions whilst affording access to legal protection, thereby supporting the evolution of the South African entrepreneur in a highly effective way.

“It is crucial that entrepreneurs see the law as a way to reduce risk in all aspects of their business and to safeguard their concepts.” – Sumaiya De’Mar.

By Sumaiya De’Mar

Disclaimer: Nothing in this article constitutes legal advice