Legalese: Reading Between the Lines

As an entrepreneur, it can be frustrating to deal with all of the "red tape" that is presented by the law in starting a business or entering into a contract with another business person. You can save yourself the hassle of contacting your lawyer every other minute by taking some time to understand some simple legal concepts.

You don't have to be a lawyer to understand these legal concepts and to know how to apply them to the different business situations that you may find yourself in. When you want to be successful in owning and operating your business, it is essential that you understand these three key concepts.

1. The offering of "consideration" in contracts in business deals.

When you are a business person, it is essential for you to understand how to create an enforceable contract. Every contract must contain "consideration." "Consideration" is when you offer something of value in making a promise to another person. For example, if you promise to build ten houses for a client in the future, then the "consideration" of the other person may be the $1,000,000 that he or she is paying you for that promise.

2. Including arbitration agreements in employment contracts.

It is also important for an entrepreneur to include an arbitration agreement in any employment agreement that he or she enters into with a future employee. By including this clause in a contract, it requires that an employee go through the process of arbitration before filing a lawsuit against an employer for sexual discrimination or other similar types of legal issues. Having an arbitration clause in an employment contract will save an entrepreneur from having to pay high legal fees every time a lawsuit is filed against him or her.

3. The value of creating an LLC.

Lastly, it is important for an entrepreneur to consider creating an LLC when he or she wants to start a business. This type of company will provide limited liability to the business person if he or she is the sole owner of the company. When an owner has an LLC, his or her personal assets can not be taken in a lawsuit against the LLC. This is one of the greatest benefits of choosing to create an LLC.

When you are an entrepreneur, it can pay big bucks to understand some basic legal concepts. You can avoid having to pay hundreds of dollars for legal counsel for every small question that you have. You may also find attorneys.com legal resources to be helpful in learning more about the legal concepts outlined here.