Stay informed about your contractual rights by locating key documents and critical language within them.

Throughout the course of your business’ operations, most small business owners execute a wide variety of documents including leases, distribution and supply agreements, employment agreements, and loan agreements. These agreements govern the relationship between you as a small business owner and the people who may have an interest in your business. Oftentimes there is language concerning certain issues related to your business, which can excuse performance. As a result, you must locate key documents which will impact your business and understand what they mean. Below is a list of important documents to obtain, and including provisions that may be in an agreement and are relevant to your situation.

Lending Agreements comprise the documents you signed when you were taking out a loan from a bank. They include documents entitled, without limitation, security agreements, guaranty agreements, loan agreements, loan addendums, mortgages, pledge of assets, and forbearance agreements. The following provisions, among others, may have a significant impact on your rights: (i) Covenants are limitations on what a business can do with respect to its property. Oftentimes covenants require a business to maintain a certain level of inventory to get credit; (ii) A default provision, which sets forth the penalties for failing to make a timely payment or meet covenants; and (iii) A remedies provision, which may be incorporated into a default provision that will contain a list of things your lender can do if you are in default.

Lease agreements, such as landlord tenant agreements, commercial leases, or rental agreements are agreements which govern your rights as a tenant, with respect to any property that you may be renting, including real property and equipment. It is important to review your lease agreement to understand (i) What your landlord is required to do to maintain the property at issue; (ii) What you are required to do to maintain the property you’re renting; (iii) Whether there is a force majeure provision; (iv) Whether there is a provision that permits you to assign your rights under the lease; and (v) Whether the lease contains an attorney’s fees provision if a party is in default under the lease.

It is important to review your insurance policy and declarations page to understand (i) Whether and how your insurance will cease to be effective in the event of nonpayment; (ii) Whether your premiums are based on the operation of your business; (iii) Whether there is business interruption coverage in your policy; (iv) Whether your insurance policy prohibits you from assigning the benefits or rights under your insurance policy to a third party; and (v) What is covered by your insurance policy.

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