Malaysians are currently under Restricted Movement Order from 18.3.2020 – 31.3.2020 (as at the date of this blog). Malaysians are advised to stay at home. Non-essential business are ordered to close down their premises https://www.thestar.com.my/news/nation/2020/03/17/frequently-asked-questions-faqs-on-movement-control-order. Similar situations are also occurring in other countries. Most business will struggle during this challenging period but true entrepreneurs will find new ways to do business and collaborate. True entrepreneurs will fight on! This blog will share some legal issues that you need to address when collaborating during this period.
1. Non-Disclosure Agreement
Before working with your new collaboration partner, confidential and sensitive information needs to change hands before discussions can happen. It is paramount and important that parties sign and enter into a Non-Disclosure Agreement. This ensures that all those confidential information are safe. Some of the key features of a Non-Disclosure Agreement are:-
A. Confidential Information cannot be shared to the public;
B. Confidential Information cannot be used by the other party for their own benefit. Example will be market research, list of suppliers, financial information etc.
C. Define what is Confidential Information to you. Each business will have different information that is important to them.
2. Scope of Work
The whole point of collaboration is that your collaboration partner does something that you can’t do or not good at doing. As such, it is key that each partner have a clear scope of work. This ensures everyone is clear on their scope of work as well as their deliverables and responsibilities.
3. Outsourced Services
Some collaborations will require 3rd party services, which are outsourced. This are businesses who are your suppliers and service providers; different from your collaboration partner. Appointment and job scope are also equally important to be made clear. You may also require a Non-Disclosure Agreement for them, depending on the type of work.
4. Clear Payment & Profit Sharing Terms
Whilst this is a term that entrepreneurs will most likely discuss first, most forget that it is not only the amount that needs to be clear but also the when, the how and the reasons why payment will be withheld.
5. Period of the Collaboration
How long is the collaboration? Is it only during this Restricted Movement period? Will the terms be the same when everything is back to normal? Do you want to renegotiate the terms of the collaboration after the end of the Restricted Movement period? There is no right or wrong answer. It is up to you how you want to collaborate.
6. Force Majeure
Things could get worst before it can get better. This means that there maybe further restrictions and challenges. Do allocate time and thought into this matter. Discuss what situations would result in a force majeure – what situations would really make the performance of the collaboration impossible. Don’t rely on your standard force majeure clause you download from google. This collaboration was born from a force majeure situation, so make sure you discuss specifics on what would be a force majeure in your collaboration.
7. Put It Down in Writing
Once you have discussed the above terms and more, do ensure that everything is put down in writing. The best is still a formal and properly drafted written agreement. An agreement that is signed digitally is still a valid and enforceable contract. You do not to physically sign the agreement. Find out more of about our services https://law-aka.com/our-services-law-firm-shah-alam/ At the very least, confirm all the terms by email and ensure the other party reply that email.
Life goes on. Business must go on. If there was no Plan B, now you are forced to think of one. Think out of the box. How can you deliver your business values in these challenging times?
Kindly do not hesitate to contact our team should you wish to know more.