Contractor Agreement
Hiring contractors is an essential part of doing business for many companies. However, allowing someone to perform work for your business can result in conflict and liability down the road if guidelines and expectations aren’t clearly outlined in a written agreement.
The Benefits of Contractor Agreements
Whether you’re doing work for another business or hiring a contractor to provide service to your own business, having a contractor agreement in place will ensure everyone agrees on the terms and conditions of the relationship. If a misunderstanding or conflict arises down the road, you’ll have a strong legal footing to fall back on.
Key Components of a Contractor Agreement
Scope of Work: Clearly define the project or services to be provided, including specific tasks and expected outcomes.
Duration and Scheduling: Outline the timeline for the project, including start and end dates, and any key milestones or deadlines.
Payment Terms: Detail the payment structure, including rates, invoicing procedures, and payment timelines.
Confidentiality Clauses: Protect sensitive business information with confidentiality terms.
Termination Conditions: Specify the conditions under which the agreement can be terminated by either party.
Dispute Resolution: Establish a procedure for resolving disputes, such as arbitration or mediation.
Understanding Contractor Agreements in British Columbia
How Does the Merger or Acquisition Process Work?
The first step in the process is often initial consultation with a team of professional advisors, which may include legal counsel, an accountant, and a financial advisor. In addition to helping you decide which merger or acquisition process is most suitable for your business, these advisors can provide guidance on structuring the deal in a way that addresses both profitability and legal risk.
The two main forms of business acquisitions, asset purchases and share purchases, each come with their own unique tax implications and legal liabilities. There are many other items to consider as well, both pre- and post-closing. It’s important to inform yourself of the benefits and consequences of the deal early on. It’s easier and less expensive to set up the right structure and retain the right advisors from the get-go rather than pivoting closer to a proposed closing date.
You may need to arrange financing for the project. Sometimes, financing can be satisfied through the terms of the agreement itself by using mechanisms like earn-outs or vendor financing. Alternatively, you may need to look to external independent or institutional investors to secure capital.
Once you have the general structure of the deal in place and a sound plan for financing the merger or acquisition, it might be appropriate to deliver a letter of intent (an “LOI”). An LOI sets out some basic terms of the deal. The terms can be binding or non-binding, and depending on the circumstances, it might be appropriate to provide a non-refundable deposit to communicate a level of commitment to the other party.
It’s typically around this stage, prior to the parties exchanging any confidential information, that the parties will also execute a mutual non-disclosure agreement (an “NDA”). An NDA helps to ensure that confidential information disclosed by each party throughout the merger or acquisition is protected, regardless of whether the deal completes.
Due diligence is usually a necessary step to any merger or acquisition, and the timing, duration, and comprehensiveness of due diligence will vary based on the circumstances. One or both parties will usually want to carry out background research on the other and their respective business, including checking for any liens on company assets, searching court registries for any current or past litigation, and reviewing any significant contracts held by the other party.
One of the most critical steps is to create a binding legal agreement that will govern the terms of your merger or acquisition. In the case of business acquisitions, this will be an asset purchase agreement (for the purchase of business assets) or a share purchase agreement (for the purchase of business shares). While each deal is unique, these two classes of agreements generally have some quintessential terms and conditions.
The final step is closing the deal and settling any post-closing matters. Closing might take place simultaneously with the signing of the merger or acquisition agreement, but it can also occur several days, weeks, or even months later. Closing is typically when many of the critical matters come to a conclusion — i.e. shares are exchanged, money changes hands, and assets are delivered.
While the exchange of consideration (e.g. money, shares, assets) generally takes place at closing, it’s important to remember that legal rights and obligations between the parties typically take shape throughout the entire merger and acquisition process, sometimes as early as the signing of an LOI. Seeking legal and financial advice early on will ensure that there are no missteps along the way.
Need Expert Advice on Mergers & Acquisitions?
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When it comes time for a merger or an acquisition, having trusted legal advisors in your corner is essential. Parr Business Law can help you minimize the risks often present in these transactions, securing your interests and pursuing the best possible result for you and your company. Schedule a meet and greet today and let’s discuss the future of your business.
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