Beginnings and endings in the business world are delicate things. Whether initiating a business deal and partnership or terminating an employee, business owners must take great care to secure their business and adhere to California law.
A contract will inform and outline these business relationships, from beginning to end. However, just because a contract ends does not mean the terms included in it should. That is when a survival clause will be critical.
What are the basics of a survival clause?
As discussed above – and in a previous blog post – a survival clause defines what terms of a contract will continue to be enforced even after a contract ends.
These are not blanket clauses that cover every aspect of the contract. They must be specific to particular elements and worded precisely. A contract that lacks proper survival clauses could put the survival of the entire business at risk.
When does your contract need a survival clause?
Business owners should consult legal guidance to craft effective survival clauses when:
- The business shares intellectual property, including processes, trade secrets or related information, which the blog post mentioned above discusses further
- The business discloses confidential information, such as financial or client details, that is protected under a confidentiality clause or agreement
- The parties involved must make payments or continue certain obligations included under the contract for a specific period of time
For example, it is only natural for employees to have in-depth knowledge of a business’ intellectual property. If a business terminates an employee, it will be critical to ensure the former employee does not divulge that information, even long after their contract ends. Including a survival clause in the original employment agreement or even a severance agreement regarding confidentiality can secure the business’ best interests and prevent serious disputes in the future.
Every beginning and end requires careful planning and preparation. It is important for business owners to work closely with an experienced business attorney to help craft and enforce contracts that will keep the business secure.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.