Rough waters.

Written by: Ismaël Coulibaly, IP/Business lawyer & trademark agent, Benoît & Côté

Let’s face it, launching your business won’t be smooth sailing in calm waters! As a start-up you must be prepared to row your (makeshift) boat through harsh weather conditions. Thus, before setting sail, make sure to take on board the necessary navigational instruments to guide you between dangerous reefs and around the storms.

1) Beyond the mere formal act of putting pen to paper, having written agreements in place will help to clearly define the outlines of your business relationships

It is key for start-up co-founders to preclude any misunderstanding resulting from implied expectations, things left unsaid and misconceptions, which are often a breeding ground for disputes.

Partnership or shareholder agreements are essential tools, providing the necessary framework to clarify expectations, establish their respective rights and obligations, in addition to anticipate different situations that may arise throughout the journey. Such enforceable instruments (and legal evidence) could be your life jacket in the event of a shipwreck.

Supervision of your ship crew member tasks and duties through a written employment agreement is also key. Moreover, it is a good way to prevent mutiny by addressing sensitive issues like ownership of intellectual property developed internally or brought to the company, as well as non-disclosure of confidential information.

That being said, a common pitfall is that start-ups often tend to rely on “one-size-fits-all” types of solutions without understanding the rationale behind it, their meaning and implications. At best, the only thing it can provide you with is a false sense of security. What is the point of having distress flares if they don’t fire? The same goes for written contracts that are inapplicable in practice or provisions with no legal force. It is important to make sure that the documents governing your business relationships are rock-solid and tailored to your specific situation.

2) A corporation being an artificial creature created by the operation of law, it speaks through its paper records

Keeping an up-to-date minute book will serve as a navigation log to keep track of your journey in addition to constitute evidence of Board decisions and approval through signed resolutions (it is important to bear in mind that potential investors while conducting a due diligence will rely on these corporate records).

3) Navigating in open seas also entails piracy risks

Securing exclusive rights to your business name or logo by registering your trademark greatly reduces the risk of seeing your vessel being hijacked (a certificate of registration is a legal title creating a presumption as to trademark’s ownership).

4) It is also worth mentioning that in certain situations, having a written agreement in place is a legal requirement

For instance, in case of work created by an external freelance contributor, an assignment of copyright must be in writing in order to be valid (nobody wants to drift in the deep waters of ownership issues).

As your business sails across this unpredictable sea, make sure to have the appropriate instruments to navigate in a more secure and controlled way.

Do not heed the siren’s call and stay the course! A legal counsel can map out a route for you and light the way to a safe harbor. Ready to raise anchor?