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Term Sheet

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What is Term  Sheet & How it is Important?

A term sheet may likewise be referred as a letter of intent, an MOU  i.e. memorandum of understanding. The first round of speculation from a  financial investor is known as a Series a Term Sheet. Every round of  investment has its own terms & conditions and these terms define a  business seeking outside capital funding. The label isn't imperative,  and regarding their structure and drafting they set out the key business  and legitimate terms in regard to a proposed transaction.

In spite of the fact that investment term sheets are not merely legal  binding but evidence to them, they simply confirm that once something  has concurred in a investment term sheet, it might be  troublesome for either side to renegotiate. Regardless of whether  renegotiation is possible, you might be compelled to concede other  matter of the deal which is essential to you. A renegotiation may even  affect the mutual understanding of the parties. Investment Term Sheet  are essential for both the financial investors &founders for various  reasons, and you ought to take a lawful guidance before you sign them.

What are the key factors of the investment term sheet?

  • Investment Term Sheet should allow both the parties to point any misunderstanding or issues,
  • Investment Term  Sheet should encourage the parties to focus on the business issues in the transaction  at an early stage,
  • It  must enable key legitimate standards to be settled, which  thus can be utilized  as a system for drafting the legal transnational  document,
  • Investment Term Sheet figure out any conditions which should be fulfilled before legalizing the documentation,
  • Investment Term Sheet contour the time for negotiation & finishing the transaction,
  • Set  out the binding components which have been concurred between the parties.

What must an Investment Term Sheet include for investing in a startup?

Before signing into a Investment Term Sheet, you ought to choose  whether the document is authoritative, partially official or not  official by any means. As an organizer, you should be careful about  restricting commitments that prejudice your capacity to work with  different financial specialists for a long time period and be more  careful about an investor who imposes a penalty on you if for any  reasons the terms of the letter are ruptured. If you are willing to get a  formal legal advice on drafting a Investment Term Sheet, you may  contact any member of our team. Let’s have a look at the following  points with respect to an Investment Term Sheet while investing in a startup:-

  • Investment Term Sheet must include the proper details of the company, current directors as well as shareholders,
  • Any rights concerning the investors or for particular founders must be included in Investment Term Sheet,
  • Details regarding the invested funds must be mentioned in the Investment Term Sheet,
  • If the investors have certain rights or reserved rights to take a  major decision in the company should be included in Investment Term  Sheet,
  • If restrictions are on the activities of the founders then it should also be mentioned in Investment Term Sheet,
  • Summary of the rights related to the transfer of share, or issues, or in case company is sold must be wound up.

Point to remember that Investment Term Sheet are non-binding which  implies that they are only a method for moving along the procedure of  negotiation with certain terms & conditions that open up the  agreement for discussion. An Investment Term Sheet is  basically a declaration of intent and not to be understood as an  official understanding apart from the Confidentiality inside it.

What Are The Key Points On Which A Founder Must Review in Investment Term Sheet?

The Investment Term Sheet for a privately owned business may consist  of about 4,000 words, but it a lot more detail. Here we are discussing  what the organizers or founders need to cover the following points while  considering a Investment Term Sheet:-

1.  Kind of Shares and the Option

The funding financial investor tends to get into a preferred class of  shares, and these offers appropriate rights that are not offered by  founders and others like employees. Specifying the rights is a normal  practice as the investment is made based on the company’s risk profile  & valuation at that specific time.

2. Valuation

This segment considers the agreed valuation of the company preceding  the new money implantation. It is to decide the cost per offer to be  paid by the investors. Most of the times, investors avoid the full  investment, rather that they prefer to invest in trenches i.e. stages  that are liable to finish particular milestones. Inability to meet the  milestone does not naturally means that the investor will abandon the  deal, it may mean that he might be looking for different terms for those  amounts.

3. Profits

Investors usually invest in startup companies to realize the best ROI  on their investment. This portion of the Investment Term Sheet traces  what investors need to do with the profits they get from the success of  the organization – either re-contributing or simply taking them as  installment.

4.  Liquidation

This portion of Investment Term Sheet  characterizes the liquidation inclinations of the investors; in the  case if an organization is liquidated for some unknown reasons. Favored  investors ordinarily get a specific measure of the returns previously  than another investor. But the structure and procedures of the  liquidation are consulted to understand the risk in every investment  process. The more the risk is, the more will be the required return.

5.  Originator Shares

The senior employees, management, founders, and others who are  responsible for the company growth are the main to take the decision for  the investors who are ready to plunk cash down. Consequently, the  investors are the key players who always stay connected with the plan  and deal, so this portion of the investment term sheet provides the  terms for the founder.

There are numerous other terms including recovery, anti-dilution,  transformation, voting rights, and other different insurances composed  into most Series a term sheets for both the investor as well as the  founder. It's imperative to work with an accomplished legal advisor who  can clarify the deal and documents in English and can make sure that you  comprehend all the terms before you sign.

Consulting Agreement

Consulting Agreement by www.thelawplanet.com

    

What Do You Mean By A Consulting Agreement?

A Consulting Agreement is an agreement or a contract  between two parties out of which, one is being a consultant and other  being a business or an individual that is taking certain services from  the consultant. It is a consultancy contract in which the terms and  conditions of consultancy scope, acts, deeds are clearly defined. It  stipulates tenure of consultancy. Consultancy is important if working  needs to be professionally accurate.

Advantages of Consulting Agreement

It defines scope of work: when availing the consultancy services to  new clients, one is likely to discuss a variety of projects that could  be tackled. It is the client's wish list can quickly grow quite  extensive. However, to perform a job, it helps to have a clearly defined  scope of work by outlining what tasks will be tackled in the contract.

Establishes the relationship: Consulting agreement helps in establishing an effective and efficient relationship between the client and the consultant.

Procedure for Preparing Consulting Agreement

  • A well efficient lawyer from our team shall contact you, and  explain you the total process, and will understand the need of  Consulting Agreement by you.
  • Once the objectives of the consulting agreement are clear, the lawyer shall draft a sample Consulting Agreement accordingly.
  • The draft Consulting Agreement shall be sent to you, for your review.
  • The whole process takes around 3-4 working days.

Any business company in the market or an organization is likely to  need guidance and supportive advice from a professional, these provide  an assistance with regard to organizing and optimization of the work  that will benefit the business of the service receiving company

This also saves a good sum of expenses by the company through  professionalism and intelligent moves under the professional organizing  capabilities and guidance from these experts. Even though Consulting Agreements differentiate tremendously from something usually simple to something exorbitantly complex.

What should be included while making a Consulting Agreement?

Have a look at the following highlights that must be included while writing a consulting agreement.

  • The scope in the work- This part of the  contract will describe the type of services the consultant party will be  providing. It shall also be stating a certain time frame that will be  allowed for the respective consultant to complete their services.Here,  is the part where it will also determine whether reimbursement for  certain expenses as compensation will be provided and that is specified  in consulting agreement section.
  • Terms of the consulting agreement-Term or time  frame is specified in this section.This will specify the length of the  time period for which consulting agreement shall stay active and when it  is supposed to be terminated. 

Breach of Contract Clause for the Consulting Agreement

This section becomes the most important part of the consulting  agreement; here there will be a specification of the details in lengths  and particularly for the specification of the apparent consequences if  the consultant party breaches the contract or consulting agreement.

By having such clause mentioned in a very detailed format both  parties, the consultant as well as the client will be able to proceed  with transparency and clarity on every step of the work.

What Details should be considered while signing A Consulting Agreement?

When the consultant wishes to give benefits by a consulting  organization, it ought to be checked whether the specialist is the  controlling investor, and whether there is a business contract signed  between the consultant and its organization. At that point, when the  consultant does not offer services through such organizations, it ought  to be asked whether the document is an agreement for an agreement for  services or contract of services - in the last case the consultant will  turn into the hiring process for organization's representatives.

Another perspective to be checked is whether the individual with whom  the organization will consent to a consulting agreement has proceeded  with the authority to negotiate, purchase or sell products for the  benefit of other peoples. If the consultant has such authority, he or  she will go about as a business agent, and thus the business terms  incorporated into the consulting agreement must be modified.

A third angle to be checked concerns the name and address of the  consultant, and in addition the name and address of the consulting  agreement organization as well. For more insight details you may get in  touch with our consultant.

Legal Notice

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What is a Legal Notice?

A legal notice is a legal  action in the form of formal communication  made to a  person/entity informing the same to undertake legal  proceedings against  him/her. It is a preliminary note of information,  letting the person/entity  know that he/she is grievance and the cause  of legal action is taken in respect  of it. It is not dealt with  cautiously, it might be a factor that the court may  consider if the  case proceeds to litigation. Thus, a person aggrieved has an  option to  file a legal notice to the  person/entity.

Advantages of Legal notice

  • It  serves as upper hand: If any legal notice is sent by a person,  the sender is always considered to be at upper hand.
  • Helps  in reducing risk: It helps in protecting  the legal rights of  both the parties and a well drafted notice can go a  long way in minimizing the  legal risks.
  • It helps in reducing the ambiguity: the  laws  and rules applicable on the person are more precisely considered and it   thus helps in reducing the ambiguity involved in the minds of people  relating  to their legal rights and obligations.

Procedure

  • A well efficient lawyer from our team shall  contact you, and  explain you the total process, and will understand the need of  filing a  legal notice by you.
  • Once the objectives of the same are clear,  the lawyer shall draft a sample legal notice accordingly.
  • The draft legal notice shall be sent to you,  for your review.
  • Once you approve it, it shall be served to  the other party.
  • The whole process takes around 3-4 working  days.

What  Are The Implications of Legal Notice In India?

A legal notice document  in India, when sent to  someone, is like a “warning” given to whomever it is  sent to. It is  making aware of them of what they aren’t aware of. It states the  wrong  doing or mistakes that recipient has committed along with the penalty   that the recipient may be subjected to if in case the person who sends  it  resorts to litigation. If you ever receive a legal notice, before  you think of  taking any action, it is always wise to consult a civil  cases handling lawyer.

How  much is the Cost of Sending a Legal Notice To Someone?

The procedure of drafting and  sending a legal notice document  to someone through or from a  veteran's office will usually  approximately can cost anywhere from ₹2500/- and  can approximately go  up to ₹7500/-. However the cost will also depend on the  case in  question, for example if a legal notice is to be sent with respect to a   simple cheque bounce, the services will be as cheap at ₹500/- where as  in case  of drafting complicated case issues will cost on the higher  side.

A  bonus tip here to cut some of the cost would be to  prepare a  draft by yourself and only go to the lawyer to send the  notice through him here  the cost of drafting will be saved and the cost  would be cut from ₹7500/- to as  low as ₹4000/-

This legal notice as the document  will also be referred to in case  of litigation later of that matter. Hence in  case of a complicated  issue it is advisable that drafting of a legal notice or  replying to it  should be done by an experienced lawyer.

Is  Legal Notice Mandatory To Send?

It always depends on the issue.  A legal notice is not always  mandatory to send. But in certain cases it is  prescribed that a legal  notice is sent before filing cases in the court of law.  An example  would of Section S-80 CPC (civil procedure code) that provides the   mandatory issue of legal notice before suing the  recipient party.  Similar to this Section S-138 of Negotiation  instrument act also makes it  mandatory to send a legal notice for  bounced cheque before getting to the  court. And so filing a legal  notice in certain cases can be quite fatal. Hence  it is advised that in  cases where sending a legal notice is not mandatory, it  should  certainly be avoided altogether.

A Precaution to take when  sending a legal notice.

Since it is fatal to send a legal notice  in some  cases, one must be very careful about issuing it by claiming  all the reliefs that you are  claiming the legal notice against.

How  You Should Respond To Legal Notice Sent By Lawyer?

For this following are some simple steps to go by:-

  • Read the legal you received very carefully and understand it. If  it  requires a reply or any certain mentioned action for example in  case of bounced  cheque, you may simply complete the payment to the  person who sent you a legal notice  and the matter is cleared there  itself.
  • Consult a professional expert lawyer and present him the  received legal  notice, the lawyer will draft a reply for you and send  it to the sender on your  behalf.
  • Depending on your reply to the sender party, the sending party  can  choose to either take the matters to the court of law or agree upon  a  settlement outside the court, and however in both cases make sure  the lawyer  you’ve used the advice of is well informed of the actions he  is helping you to  take.

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