Ankit Chugh
Asked August 03, 2016

guidelines for drafting

  • 2 Answers
  • 53 Views

Hi , I have a social enterprise called Digimpact and we're working to support NGOs in digital data collection and analysis. I need to get the following documents drafted- 1. Founders'/shareholders agreement. 2. NDA for contracting freelancers for software development and design and pro bono advisers/ mentors with clauses on IP ownership. 3. Employment Agreement and HR policies. 4. Terms of Use for our product. 5. MoU with prospective customers. Please let me know what would be a good time to talk.

Answers 2

Default avatar
Ashwini Panwar

A founders’ agreement is an essential part of social enterprises and you need to make an agreement as transparent as you can. You need to understand that the agreement would bestow some rights, liabilities and power on all the founders. It is the seed document that would be used as a framework for a legal relationship between the founders. You need to draft your founders’ agreement as per the requirements of the work your enterprise does. However, you need to ensure that the agreement is approved by a qualified lawyer before the agreement is signed. These are the basic clauses every founder’s agreement has:

  • Defining the relationship of the partners.
  • Percentage of Shares in the Company
  • Vesting of Shares
  • Role of founders
  • A basic communication and conflict resolution clause that can help prevent disputes.
  • Apart from this, there are a lot of templates for such agreements available on the internet, do look it up.

    A non-disclosure agreement would ideally lay down the boundaries, the information within which should not be disclosed and information might include copyright material, trade secrets, customer list etc. In short, disclosure of such information could lead to irreparable damage. Since, the agreement is all about confidentiality, you need to have a detailed description of what constitutes as confidential information. Apart from that, the following points should be kept in mind:

  • Clearly defined purpose of disclosure
  • Prohibition from using or distributing information outside the intended purpose
  • Non-compete clauses, if needed.
  • Destruction of information after the fulfilment of purpose.
  • Obligations of parties towards each other.
  •  

    Coming to Employment agreements, such agreements will contain the details an employer and the employee agree upon. Some basic clauses associated with such agreements are a provision on working hours, salary of the employee and description of the job. Before drafting an employee agreement, identify the proprietary information that is owned by the Enterprise because such information is not accessible to the public. The agreement must make it very clear who the parties to the contract are and what purpose is the contract for and what are the considerations involved which means that you need to tell what both parties are willing to lose for what they get.

    Now, you need to know the difference between the contract for service and contract of service. A contract for service is entered into with an independent contractor, a person who would do specific jobs of work for other persons without submitting himself to their control in respect of the details of works and jobs. So, the degree of control you exercise would decide what kind of contract to draft. Apart from that, one significant difference is that an independent contractor could serve more than one person at a time. This needs to be kept in mind while drafting employment contracts as it may have different legal consequences, mainly in court cases. Some tips to follow while contract drafting:

  • Clarify the process of termination of contract.
  • Define terms of non-competition (limitations on working for competitors.
  • Specify which law the contract is bound by.
  • It would be advisable to describe the sexual harassment policy too.
  •  

    For an HR policy, you need to figure out what needs to address in the policy. The goal of having a policy is to provide answers and reduce fear of unknown events. The policy you draft should be an answer to the questions your employees have asked or would have anticipated. Apart, from that, making a visual policy could also help. The U.S. Air Force uses visuals for some of their guides. The point is, sometimes the words still might not be so clear, a picture might be much more helpful. Drafting a policy is one half of the job done, you need to make sure that the employees know the policy because them being unaware of the policy is your loss only, the goal of such a policy is not just create it and keep it a secret. There should also be plan to communicate your policies. You could give a brief introduction about the policies during the orientation and other policies could be explained by the managers or heads. Apart from that change in law and technology might mean that there need to some changes made, so these policies need to be discussed on a regular basis. Now, there are some responsibilities that fall upon you while drafting such policies:

  • Understanding the culture (corporate culture).
  • Analysing the existing policies.
  • Seeking the views of the employees.
  • Assessment of areas where policies are needed or need to be improved.
  •  

    While drafting the Terms of Use, the first rule is that you do not copy someone else’s terms of use and use it for yourself. You need to analyse the kind of business that you are. You need to understand that these terms form a contract between you and the user. While it’s nice to be user friendly, it is still advised that your terms are specific and clear from the legal perspective hence, you just cannot avoid legal language. You need to ensure that the trademarks and logos belong to you and the users do not have a license to use them, the same goes for website content and copyright. If you have a kind of site that would allow users to submit content, it needs to be told that the rights to the content belong to you and you could do what you want with it. Apart from that, make sure to make it clear whether the submitted content is confidential or not.

    You also need to be aware about third party content, if the site has a links to advertisers, ensure that you disclaim any liability with the products and services bought from those sites. It is essential to notify what sort of use of the website is prohibited. It is also important to specify who has access to personal information and that users are put on notice that they are responsible for anything that happens under their passwords. Lastly, make sure that the product has limitations on the liability; there should be clause holding users responsible for violations of Terms of Use.

     

    A Memorandum of Understanding is a statement of responsibilities, activities, outcomes and lead contacts between the parties involved. The MoU should contain all the relevant information regarding the foundation of the project and how it will work, this way all the partners have the same understanding and it would provide as a reference point throughout the project. It needs to be written in such a language that it can be easily understood and not easily misunderstood. The provisions in the MoU must not be conflicting with any existing arrangements between the parties (there could be more than two parties) and neither with any of the arrangements either party has with other enterprises.

    You also need to know that an MoU is not legally binding. However, you need to specify the clauses that you intend to make legally binding. However, having clauses just under the name of MoU doesn’t mean it’s not legally binding; the contractual nature of an MoU can be challenged. The following are some essential clauses apart from what has been discussed above:

  • Definition of terms.
  • Aim and Scope of the MoU
  • Joint undertakings and responsibilities
  • Terms of operation
  • Official endorsement by each party
  • Additional annexes as required.
  •  

    Lastly, since everything you asked is very formal in nature, it needs to be developed with assistance from not just legal experts, but even financial experts and other experts. You need to do a fair amount of research before drafting all this content. All this needs to be done to ensure that the provisions are sensible and do not produce unexpected expectations or unintended implications.

    Agree Comment 0 Agrees 12 months ago

    Default avatar
    Ashwini Panwar

    A founders’ agreement is an essential part of social enterprises and you need to make an agreement as transparent as you can. You need to understand that the agreement would bestow some rights, liabilities and power on all the founders. It is the seed document that would be used as a framework for a legal relationship between the founders. You need to draft your founders’ agreement as per the requirements of the work your enterprise does. However, you need to ensure that the agreement is approved by a qualified lawyer before the agreement is signed. These are the basic clauses every founder’s agreement has:

  • Defining the relationship of the partners.
  • Percentage of Shares in the Company
  • Vesting of Shares
  • Role of founders
  • A basic communication and conflict resolution clause that can help prevent disputes.
  • Apart from this, there are a lot of templates for such agreements available on the internet, do look it up.

    A non-disclosure agreement would ideally lay down the boundaries, the information within which should not be disclosed and information might include copyright material, trade secrets, customer list etc. In short, disclosure of such information could lead to irreparable damage. Since, the agreement is all about confidentiality, you need to have a detailed description of what constitutes as confidential information. Apart from that, the following points should be kept in mind:

  • Clearly defined purpose of disclosure
  • Prohibition from using or distributing information outside the intended purpose
  • Non-compete clauses, if needed.
  • Destruction of information after the fulfilment of purpose.
  • Obligations of parties towards each other.
  •  

    Coming to Employment agreements, such agreements will contain the details an employer and the employee agree upon. Some basic clauses associated with such agreements are a provision on working hours, salary of the employee and description of the job. Before drafting an employee agreement, identify the proprietary information that is owned by the Enterprise because such information is not accessible to the public. The agreement must make it very clear who the parties to the contract are and what purpose is the contract for and what are the considerations involved which means that you need to tell what both parties are willing to lose for what they get.

    Now, you need to know the difference between the contract for service and contract of service. A contract for service is entered into with an independent contractor, a person who would do specific jobs of work for other persons without submitting himself to their control in respect of the details of works and jobs. So, the degree of control you exercise would decide what kind of contract to draft. Apart from that, one significant difference is that an independent contractor could serve more than one person at a time. This needs to be kept in mind while drafting employment contracts as it may have different legal consequences, mainly in court cases. Some tips to follow while contract drafting:

  • Clarify the process of termination of contract.
  • Define terms of non-competition (limitations on working for competitors.
  • Specify which law the contract is bound by.
  • It would be advisable to describe the sexual harassment policy too.
  •  

    For an HR policy, you need to figure out what needs to address in the policy. The goal of having a policy is to provide answers and reduce fear of unknown events. The policy you draft should be an answer to the questions your employees have asked or would have anticipated. Apart, from that, making a visual policy could also help. The U.S. Air Force uses visuals for some of their guides. The point is, sometimes the words still might not be so clear, a picture might be much more helpful. Drafting a policy is one half of the job done, you need to make sure that the employees know the policy because them being unaware of the policy is your loss only, the goal of such a policy is not just create it and keep it a secret. There should also be plan to communicate your policies. You could give a brief introduction about the policies during the orientation and other policies could be explained by the managers or heads. Apart from that change in law and technology might mean that there need to some changes made, so these policies need to be discussed on a regular basis. Now, there are some responsibilities that fall upon you while drafting such policies:

  • Understanding the culture (corporate culture).
  • Analysing the existing policies.
  • Seeking the views of the employees.
  • Assessment of areas where policies are needed or need to be improved.
  •  

    While drafting the Terms of Use, the first rule is that you do not copy someone else’s terms of use and use it for yourself. You need to analyse the kind of business that you are. You need to understand that these terms form a contract between you and the user. While it’s nice to be user friendly, it is still advised that your terms are specific and clear from the legal perspective hence, you just cannot avoid legal language. You need to ensure that the trademarks and logos belong to you and the users do not have a license to use them, the same goes for website content and copyright. If you have a kind of site that would allow users to submit content, it needs to be told that the rights to the content belong to you and you could do what you want with it. Apart from that, make sure to make it clear whether the submitted content is confidential or not.

    You also need to be aware about third party content, if the site has a links to advertisers, ensure that you disclaim any liability with the products and services bought from those sites. It is essential to notify what sort of use of the website is prohibited. It is also important to specify who has access to personal information and that users are put on notice that they are responsible for anything that happens under their passwords. Lastly, make sure that the product has limitations on the liability; there should be clause holding users responsible for violations of Terms of Use.

     

    A Memorandum of Understanding is a statement of responsibilities, activities, outcomes and lead contacts between the parties involved. The MoU should contain all the relevant information regarding the foundation of the project and how it will work, this way all the partners have the same understanding and it would provide as a reference point throughout the project. It needs to be written in such a language that it can be easily understood and not easily misunderstood. The provisions in the MoU must not be conflicting with any existing arrangements between the parties (there could be more than two parties) and neither with any of the arrangements either party has with other enterprises.

    You also need to know that an MoU is not legally binding. However, you need to specify the clauses that you intend to make legally binding. However, having clauses just under the name of MoU doesn’t mean it’s not legally binding; the contractual nature of an MoU can be challenged. The following are some essential clauses apart from what has been discussed above:

  • Definition of terms.
  • Aim and Scope of the MoU
  • Joint undertakings and responsibilities
  • Terms of operation
  • Official endorsement by each party
  • Additional annexes as required.
  •  

    Lastly, since everything you asked is very formal in nature, it needs to be developed with assistance from not just legal experts, but even financial experts and other experts. You need to do a fair amount of research before drafting all this content. All this needs to be done to ensure that the provisions are sensible and do not produce unexpected expectations or unintended implications.

    Agree Comment 0 Agrees 12 months ago

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