One of the reasons contracts vary from simple to complex is because of its private and customizable nature. When money and power are at risk, what started as a friendship and a verbal handshake deal can suddenly become a nasty legal war. My mission is that you avoid this kind of issues. Thus, in part 2 of this blog post, we will finish laying out the other 5 typical contracts your business needs.

1. Investment Agreement

You can use an Investment Agreement to protect yourself and keep control over your business when raising money or capital. Depending on your entity selection, this agreement is also known as Shareholders or Investors Agreement, and the basic notion is to answer many “what ifs” regarding business power or control, voting rights, disagreements, etc. When looking for financial help, be aware of this possibility.

2. Licensing Agreement

A Licensing Agreement is a deal between the owner of intellectual property and a person who wants to use the intellectual property (“IP”). Using this contract the owner of an IP (Licensor) grants someone (Licensee) permission upon certain conditions, often including either a lump sum payment or a royalty fee. Let’s say you are a videographer, and someone wants to use a portion of your work, a licensing agreement could help you monetize your IP. The same with photos, designs, music, etc.

3. Franchise Agreement

A Franchise Agreement is similar to the Licensing Agreement to the extent that the franchise owner (Franchisor) grants permission to someone else (Franchisee) to use the franchise system. The franchise system includes recipes, branding, standard procedures, etc. For example, let’s say you want to start a Chipotle® restaurant in Puerto Rico. In order to do so, you will need to enter into a Franchise Agreement with Chipotle Mexican Grill, Inc., and they will establish the terms and conditions for establishing a franchise here.

4.Distribution Agreement

Distribution Agreements were once, and still are in some way, one of the holy cows of commercial law in Puerto Rico, thanks to Act 75-1964. This type of agreement controls the relationship of manufacturers or producers and distributors of goods. Regardless of whether the agreement is exclusive or not, if you are distributing or exporting a product for distribution by another person, you sure need a Distribution Agreement.

5. Production Agreement

Let’s say your business engages in producing and packaging goods. To do so, you will have to: formulate, blend, manufacture, and produce certain good; fill cans or boxes with the product; prepare the product for shipment and loading onto carriers; and preparation and deliver the product through trucks, boats or airplanes. A well-written Production Agreement will envision the risks and potential liabilities that entails such a venture.

Conclusion

In part 2 of this blog post, we finished laying out 5 more typical contracts your business needs. Obviously, these are not the only ones. So, comment below what other contracts would you like me to write about?

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