How a Well-Drafted Operating Agreement Can Protect the Business & Minimize Business Disputes

Jake Posey [email protected]

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Contracts and agreements are critical documents for any company. In fact, having the right contract is the best defense to an unfortunate business situation. When a business dispute comes along, a well-drafted contract or agreement will be your business’ lifeblood. Unfortunately, many small business owners try and save money by writing their own contracts, which may not incorporate the right language or be worded to protect the company’s interests. 

Even before vendor, employment, distributor, non-disclosure, non-compete, and other business contracts are written, a company needs to have an operating agreement constructed. An operating agreement is a core document that every business needs, no matter the size of the company or who you enter into business with—even relatives. 

A Strong Operating Agreement Safeguards the Business Partners and Owners

When a dispute arises between business owners, partners, managers, or other business members, it is the operating agreement that can help reduce misunderstandings and avoid business disputes—that is, if it is worded correctly. 

A strong operating agreement will set forth the rules agreed upon by all business owners, and will also include:

• Business’ objectives and purpose
• Assets that all partners contributed 
• Rules and guidelines for transfer of ownership or new members
• Allocations and distributions of profits and losses the business incurs  
• Guidelines for resolving business disputes among members
• Rules for confidentiality regarding company records and names of customers
• Restrictions on Transfer and Rights of Refusal
• Rules for Arbitration, Mediation, and Indemnification
• Dissolution of the business agreement

Because this is a core document, business owners should take this into consideration and talk with an experienced business contract attorney in Texas to make sure their interests are protected. When an operating agreement is well constructed, businesses will be able to avoid most legal disputes. This is why skilled contract attorneys need to be contacted for drafting precise agreements that will anticipate potential problems and minimize a company’s risk of future discrepancies.

The Posey Law Firm can help best preserve your rights and interests by drafting, negotiating, and reviewing your contracts to make sure they are written precisely and in an understandable language for all parties to appreciate. Call us so that we can draft a clear contract to sustain your company’s business for years to come. For more information contact an Austin contract drafting lawyer toll-free at 888-269-1962 or locally at 512-646-0828 for a free case consultation.