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Steve O'Donnell, Ph.D. Registered Patent Attorney

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A verbal contract isn't worth the paper it's written on.
Samuel Goldwyn
In my opinion, contracts are really the basis of all law.

I'll explain. In a contract, one party agrees to do, or not to do, something, in return for something from another party. A marriage is essentially a contract between the spouses, where each person makes promises to the other. Patents are agreements between inventors and society that in exchange for sharing information, the inventor has a period of exclusive use of that information. Even criminal law is a based in a type of social contract, individuals agree to follow the law in exchange for being part of society.

In business, contracts are a little less theoretical. A well written contract puts both sides on notice as to what their obligations are to each other, and details what can happen if those obligations aren't meant. The trouble usually comes up when some problem arises in the transaction that the contract doesn't address.

If a contract says that I will pay you Tuesday for a hamburger today, and you give me a hamburger, then my obligation for Tuesday is clear. If you give me a hot dog, things are a little less clear. You still bought me lunch, but I wanted a hamburger. Did accepting the hotdog create an obligation to pay you on Tuesday or was it a gift? If I pay, do I have to pay the cost of the hamburger we agreed on or the cost of the hotdog? Wimpy never had these problems.

Intellectual property often has unique twists that might not be caught by some lawyers. Contracts to create a logo or website are usually deficient and ignore the rules concerning copyright assignment. Contracts to let someone use a trademark often don't address what happens if one party does something to tarnish the mark. Patent assignment or licensing contracts may not address licensing grant-backs or transfer all the necessary rights. or they may leave too much open to interpretation concerning when royalty payments are made and what can be done if the licensee fails to commercialize the product.

Most realize the importance of a contract between a business and its insurance carrier, its landlord, or its shipping company, but contracts also should be in place between a business and it's vendors, and between the business and its employees.

Whether you need a contract for your first employee or you're licensing your patent to a multi-national corporation, I know how important these things are to a small business and I work closely with my clients to ensure that they get the legal counsel they deserve.