Zain & CO - MaGIC SE Legal Handbook (IP + Commercial Contract)

MaGIC Social Enterprise Legal Handbook (Draft 1)
4/3/2016
INTELLECTUAL PROPERTY
Every social enterprise would have a business name, a logo, a website and a product or a
service which the founders consider to be its competitive edge the very reasons driving its
existence. In each of these, are elements of intellectual property (IP).
1. WHY IS IP IMPORTANT?
For value creation.

Intellectual property constitutes as valuable assets to the social enterprise which
require protection to optimise the value of the business and to enhance its
competitive advantage. Ultimately, this would also make it more attractive to
investors.
To avoid business disruption

The social enterprise would also need to be aware of the intellectual property
belonging to others which it may use in the course of its business in order to avoid
exposure to litigation for infringement.
Intellectual property is often created at the social enterprises earliest stages and if
intellectual property rights are not addressed properly from the start, the social enterprise
may not be maximizing the value of its assets, or worse, find it being subject of a costly
litigation suit for infringing the rights of another.
2. WHAT IS IP ?
IP are creations of the human mind in tangible form which the law accords the status of
property in the same way the law accords status and value to real property like land and
buildings and physical assets like office equipment.
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3. SUMMARY OF MAIN FORMS OF INTELLECTUAL PROPERTY
Type of IP
What does it cover?
What are the

requirements to qualify?
How to secure
protection?
Literal,
artistic and
musical
work -Life
of author
plus 50
years
a) Must exist in a
tangible medium
Copyright
Trademark
Literary Work;
Musical Work;
Artistic Work;
Film;
Sound Recording;
Broadcasts;
Derivative Work;
Published Edition;
or
Live
Performance.
Words
Logos
Names
Images
Signature
Brand
Heading
b) Originality :
independently
created
c) Author must be a
qualified person
under the law citizen or
permanent resident
of Malaysia.
Automatic upon
the original work
is reduced to any
material form
If the author is a
body corporate it
must be established
in Malaysia and
constituted or
vested with legal
personality under
the laws of
Malaysia.
Shall consist of at least one

of the following :
Name of individual
or company in a
special or
particular manner
Signature of the
applicant for
registration or some
predecessor in the
business
An invented word
A word having no
direct reference to
the character of the
goods, according to
its ordinary
meaning or a
geographical name
Duration
of
protection
?
Registration with
MyIPO
Other than
Literal,
Artistic and
musical
work - 50
years from
the date of
publication
10 years
from the
date of
filing
application
and
renewable
every 10
years.
Examples
Company logo
Slogan/ tagline
Contents of
website
Books
Films
Songs
Video Games
Trademarks
such as :Coca Cola
Starbucks
Nike
Intel logo
Because
youre worth it
Loreal Paris
Roaring Lion
for MGM
Entertainment
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of surname
Industrial
Design
Original feature of shape,

pattern, or ornament
applied to an article by
any industrial process or
means being features in
the finished article and
has a visual appeal.
Any other
distinctive mark
New , it must not be

disclosed to public
anywhere in
Malaysia or
elsewhere
Not dictated solely

by function
Not dependent
upon the
appearance of
another component
article
Not against the

public morality
Registration with
MyIPO
Five (5)
years from
the date of
filing and
renewable
for four (4)
consecutiv
e terms of
5 years
each,
Household
utensils
Electronic
gadgets
Furniture
designs
Secret recipes
Trade
Secret
Any information which is

confidential and not
known to the public
Any trade formulae,

processes, designs,
patterns which are
not generally known
and which company
can gain advantage
over competitors.
Confidentiality
Agreement
between parties.
Protection
is
maintained
so long as
it remains a
secret and
does not
become
public
knowledge.
Product
Formulae
Source Codes
Customers List
Business Plans
Marketing
strategy and
techniques
Employees
training manuals
Patent
Original invention
New process
covering a new
solution to a
specific
technological
problem.
a) It must be
novel/new. An
invention is
new/novel when it
has not been
disclosed to the
public anywhere in
the world in any
manner prior to
filing of the
application.
b) It must involve an
inventive step.
c) It must be
industrially
applicable.
Capable of being
made and used in
any kind of industry.
Therefore, it must
Registration with
MyIPO
Biological
inventions
20 years
from the
date of
application
Business
methods
Pharmaceutical
compositions
Computer
software which
affects
functional
operability

be of practical use.
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4. HOW INTELLECTUAL PROPERTY FEATURES IN THE LIFECYCLE OF THE SOCIAL

ENTERPRISE
PHASE 1: SELECTING A BUSINESS NAME AND A TRADE MARK
In starting the social enterprise, the selection of a name is possibly one of the first business
decisions the founders collectively make. An effective business name can be a very useful
branding tool. A good business name should be unique and distinct such that the public
would immediately associate such name to the goods or business of the enterprise.
To increase branding potential, very often, business names are aligned to the product/
services offered. The strongest trademarks are those that appear unique and distinct while
the weakest are those which are merely descriptive and generic. A good business name cum
trademark is often a completely invented word for example Coca Cola / Cocoa Cola
Company as it is so distinct, the public would only ever associate it to the soft drink and to
nothing else. A stronger mark would lead to a higher probability for it to be registered under
the trademark laws and achieve market distinctiveness.
PHASE 1: RECOMMENDED ACTION STEPS
(1) Perform a trademark search at MyIPO to ensure no one else is already using the
proposed business name/ mark especially if its intended that the name of the
business be aligned to the trade mark.
(2) Perform an internet search to ensure no other businesses is using the proposed
company name/ mark.
(3) Ensure the proposed name/ mark is not descriptive of the business/product/ service.
(4) Reserve the selected company name with Companies Commission of Malaysia.
(5) File the selected trade mark application with MyIPO.
(6) Prior to registration, the trade name/ mark may be used as an unregistered
trademark.
(7) Once registered, to sustain registration, the trademark must be used. A trademark
can be cancelled for non-use if it is not used for 3 consecutive years.
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PHASE 1: RISKS OF NOT PROTECTING INTELLECTUAL PROPERTY

(1) A third party may secure registration to the same mark and will then have the right to
sue and stop any other use of any identical or similar mark.
(2) This will cause market confusion and lead to business disruption.
(3) This will also erode on any established business goodwill and affect consumer
confidence.
(4) Branding and marketing strategies will have to be reviewed.
(5) Resources and management time will have to be allocated towards managing
disputes.
PHASE 2 : DESIGNING A LOGO
Trade mark also extends to logos, images or any of the combination that can reflect the
goods and services of the social enterprise. A logo identifies and distinguishes a product or a
service from one business to another and acts an overall image of the business. In an
increasingly visual world, logos are usually the first thing the public would remember of a
business, thus it is important to have logos that would capture the attention of the public to
improve market visibility.
(1) If a design consultant is hired, crucial to secure releases that the work produced is
original.
(2) For the sake of prudence and completeness, conduct parallel internet and MyIPO
searches to ensure the intended logo is not similar to any existing logos, especially
operating in similar businesses.
(3) File an application to MyIPO through a trademark agent to secure protection of the
logo.
PHASE 2: RISKS OF NOT PROTECTIING IP
(1) A third party may secure registration to the same logo and will then have the right to
sue and stop any other use of any identical or similar logo.
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(2) Business goodwill will be affected and will lead to disruption.

(3) This may cause confusion to the public as due to similarity the third partys goods
may be perceived as being associated
to the goods or services of the social
enterprise.
PHASE 3: DESIGNING A WEBSITE
In designing a corporate website, there will be commentary related to the social enterprise,
its work profile as well as images or photographs being used. The contents of the website
itself will be protected by copyright. Any literal and artistic work that has been reduced in
material form can be protected under the law.
Copyright does not require any form of registration. However, it is important to ensure that in
the course of creating the website, any information or any images used from any external
sources must provide credit to the original owner(s). In some circumstances, one will need to
seek the permission from the owner to use his works, for example if the website has
accompanying music, permission must be sought from the copyright owner of the musical
works .This is essential to ensure there is no infringement of copyright.
PHASE 3 RECOMMENDED ACTION STEPS
Protecting copyright is important but it is equally important to ensure the social
enterprise is not infringing other trademarks and copyright and make it as its own.
(1) If using website designers, to secure releases that all materials are original work or
have been properly licensed for use.
(2) If website being developed by own employees, to ensure materials used are original
and if using external sources, to provide credit to the original owner.
(3) If using materials available in the public domain, for completeness, to check whether
there are applicable conditions attached to the material.
(4) Ensure website itself contains copyright notices and if possible, to build in copyresistant features especially if website itself constitutes a primary competitive edge to
the social enterprise.

PHASE 3 RISKS OF NOT PROTECTIING IP
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(1) .A third party may use materials on the website as their own for commercial
purposes, weakening competitive.
(2) If releases are not secured, there may be exposure to the original owners of work
making a claim of infringement which will lead to valuable management time and
resources being allocated towards handling of the disputes.
(3) Websites stand as the virtual window of the social enterprise and if any part of the
website is being challenged or has to be redesigned, this may affect consumer
confidence and credibility.
PHASE 4: DEVELOPMENT OF PRODUCT

Any new products developed with original feature of shape, pattern, or ornament applied to
an article by any industrial process which has a visual appeal may qualify for protection
under the Industrial Design Act 1996. If an invention is a product or a process that provides a
new way of doing something or offers a new technical solution to a problem, such innovation
should be assessed to determine if it may qualify for protection under the patent law.
PHASE 4 RECOMMENDED ACTION STEPS
(1) It is crucial to apply for registration of any design or patent as soon as possible
BEFORE the design is being made available to public.
(2) With patents, consider doing a patentability search on the technology which is being
developed to assess which other companies may be operating in the same space
and to assess how patentable your ideas may be from an early point
(3) It also helps to understand competitors operating in the same industry and keep
abreast of their developments.
(4) Before using any IP components, ensure the social enterprise owns it, or has the
authorization to use it for the purpose required for design process.
(5) Ensure Non Disclosure Agreements are signed prior to discussions with any external
parties including any parties engaged to manufacture prototypes.
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PHASE 4 RISKS OF NOT PROTECTIING IP

(1) Based on first to file, any party secures registration will be deemed legal and rightful
owner regardless of who was a prior user in time. A third party who secures registration
will have the right to sue and stop any use of infringing designs or patents.
(2) The business goodwill will be affected and this is a loss to the business as it has failed
to maximize true value of its assets.
(3) Any claim against the social enterprise of infringement will lead to valuable time and
resources being allocated to managing disputes.
PHASE 5: DEVELOPMENT OF MARKETING COLLATERALS
Once the social enterprise has chosen its business name and developed its product or
services, it will be thinking of ways to present the goods and services to the public.
The same principles apply for any materials encompassed within the marketing strategies,
either through the developed website, sale brochures or other marketing collaterals-,ensure
all materials used are of its own and if there is intention to take any images or any work of
any kind either through the internet or any other sources, credit must be given to the owner.
(1) Conduct industry-wide research on the industry in order to appreciate and
understand and determine available materials and marketing methods used by other
competitors.
(2) Ensure any marketing strategy and materials developed is unique and do not infringe
any existing IP rights.
(3) Assess and identify the business unique marketing collaterals and take appropriate
measures to get it protected under the law.
(1) As marketing collaterals are distributed en masse, third parties may copy the social
enterprises marketing collaterals for their own business
(2) This can lead to consumer confusion and there are risks of unauthorised
associations which would affect business goodwill.

PHASE 6 : DEVELOPMENT OF OFFICE POLICIES
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Once the business is set up, strong office policies will help sustain the business for future
development. Effective policies ensure the business is run smoothly and help maintain the
goodwill of the business. One of the important features is to ensure all confidential
information to the business maintain as trade secret. This includes the list of customers,
secret recipes, pricing table and business plans. Maintaining confidentiality is the key to
trade secret protection.
PHASE 6 : RECOMMENDED ACTION STEPS
(1) Physical security - restrict access to only senior
employees for top confidential
documents
(2) Mark all secret trade information as CONFIDENTIAL,
a. all employees employment contract must include a strict confidentiality
clause. external contractors who have contact with trade secret information
should sign a Non-Disclosure Agreement (NDA) that includes the obligation
to keep company information confidential,
b. continue this confidentiality obligation after the employment or business
relationships ends;
(3) Use passwords on documents/computer access and placing confidentiality blocks
on documents
(4) Adopt internal need to know disclosure policies and restrict dissemination of top
secret information only amongst founders.
(5) Establish an IP management policy.
(6) Employment aagreements should also provide explicitly that the social enterprise
owns all intellectual property developed in course of employment or outside course
of employment, if using any company data or resources.
PHASE 6 :RISKS OF NOT PROTECTIING IP
(1) Breach of confidentiality
(2) Value of intellectual asset eroded.
(3) Publishing or disclosing invention before filing a patent application will also destroy
novelty and will affect any patent protection adversely.
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(4) Employment Agreements when outsourcing any work, to provide explicitly that the
social enterprise owns intellectual property, this may lead to ambiguity and
challenges.
(5) Similar adverse effects if non disclosure agreements are not signed with external
consultants in any outsourcing arrangements or even when discussing your
intellectual property with others.
(6) Trade secrets of your business are free to be shared among others which may
jeopardize the business as a whole.
PHASE 7: BUSINESS EXPANSION -PROTECTING INTELLECTUAL PROPERTY RIGHTS
OVERSEAS
Securing a local or domestic trade mark or patent application does not protect the social
enterprise mark or invention outside Malaysia. To obtain protection in a foreign country, a
separate application must be submitted. Protection should be sought in every country in
which the social enterprise envisages a business presence.
It is advisable to get the
protection prior to the commencement of business to ensure the business can run smoothly.
(1) Determine which country the social enterprise would like to seek protection for all of
the IP of the business.
(2) Engage a professional in the relevant jurisdiction to determine if there are any similar
IP that has been registered, also to assess the likelihood of the IP to get protection in
the country of choice.
(3) Ensure all documentation and proof of ownership of the IP is documented, this would
to help with the registration process.
(1) IP registration in Malaysia does not afford protection in any other country. A third
party in any relevant jurisdiction may exploit any trade names/ logos/ materials/
marketing strategy available on the internet and this may lead to them securing
registration in a first to file territory.
(2) There will be no available remedy against the third party if there is any infringement
of IP in the country where the social enterprise has not sought IP protection. In an
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increasingly virtual world, any infringement issues in another market may equally
affect local consumer confidence and credibility.
SUMMARY : Checklist for IP management steps and procedures Minimum
compliances steps and procedures
Before using any IP components, ensure the social enterprise owns it, or has the
authorization to use it for the purpose required.

Require written confirmation of originality from anyone who creates IP for the social
enterprise.
Ensure partners working on joint-projects have the necessary rights and permissions
to use the IP if they are contributing to the project.

Consider using material available in the public domain. However, check whether
there are applicable conditions attached to the material.

Always document all stages of research and development in internal workbook and
keep chronology of dates.

Check whether new employees are subject to any confidentiality restrictions imposed
by their former employer or any other persons. Keep a record of such restrictions.
Ensure employees under confidentiality restrictions; do not work on projects where
the work is potentially covered by those obligations.

Where an idea or information that is disclosed to the organization was already known
or is later disclosed by another source, notify the other party at the time. Record this
notification and the basis for it.

Monitor the market for new patents or other IP in trade press or through industry
forums.
Ensure that the chain of title for licensed material has been properly linked from all IP
owners.
Ensure confidentiality agreements are in place before discussing any ideas with
partners with whom the organization may be collaborating.
IP FREQUENTLY ASKED QUESTIONS

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1. Which IP protection should I be seeking for my social enterprise?
Deciding this will be largely dependent on what kind of business you are running. Every
Social Enterprise will find it necessary to protect their trademark(s), as this would be very
central to creating its branding and awareness to the public. A social enterprise in the
business of food and beverages for instance would find it crucial to protect its secret
recipe(s) and trade sources-these would generally be encompassed within trade secrets. A
social enterprise in the business of creating environmentally friendly storage containers may
want to protect the design as well as to consider if the invention is patentable.
2. Can two or more people be authors of a work?
Yes, this is what is known as joint authorship. A work of joint authorship will only arise when
it is not possible to identify each author's respective contributions. A clear example of distinct
contributions would be in the creation of a song, Adam wrote the lyrics while Bob wrote the
music. In this instance, there would be two distinct copyright works, one relates to literary
and the other, musical.
3. What can I do if there is a third party using my IP of any form?
At a preliminary stage, , you can send a cease and desist letter alerting the other party that
you are aware he is using infringing materials legitimately owned by you and giving a grace
period for the party to comply. If this does not suffice in getting the unauthorised third party
to cease using your IP you may wish to seek legal assistance for a formal legal demand to
be issued on your behalf. If this does not resolve matters, then you may need to consider or
seek recourse through a court process or settlement of disputes through alternative dispute
resolutions agencies, such as mediation or arbitration services offered by the Kuala Lumpur
Regional Centre for Arbitration.
4. Who owns the right of the IP?
Generally, the person who owns the right to IP is the creator or inventor, the employee, if the
IP is created by an employer in the course of the employment (unless otherwise provided in
the contract) and the person who commissions the creation of the IP (unless otherwise
provided in the contract).
5. What are moral rights of the author?

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Otherwise known as authorial rights, these are entrenched rights conferred on the author
of the work. This concept is particularly important if the author of the work is not the owner,
for example in employer-employee situations or where the author has assigned his
copyright. The author's moral rights are his fundamental entitlement to be identified as the
author and to protect the work against distortion, mutilation or modification which may
significantly alter the work and is such that it might be reasonably be regarded as adversely
affecting the author's honour or reputation.
6. What if my IP is not protected?
This all depends on the type of the IP in question. For trademarks, there exists rights in
exceptional - unregistered marks (provided certain requirements are met, central of which
establishing is a strong market reputation) and thus the owner is entitled to claim remedies
through the law of passing-off. However, for patents and industrial designs, rights are only
accorded by virtue of registrations. Prior to filing, the invention must be kept completely
secret and not made available to any section of the public. Once it is made available to the
public at any time prior to filing, it destroys novelty and will therefore not qualify for
protection and be deemed to be free to use by all. This will mean the owner will lose
protection rights to the IP and the invention will be deemed to be free to use by all.
7. How do I enforce any breach of confidentiality to my trade secrets?
Trade secrets unlike trademarks, patents and design rights are not protected by
registration. However, any breach can be enforceable provided three elements essential to a
cause of action in breach of confidence are established namely:a) that the information was confidential in nature;
b) that it was communicated in circumstances importing an obligation of confidence;
and
c) that there was unauthorized use of the information.
Alternatively, if a non disclosure agreement was signed, a cause of action in breach of
contract would also be available if there were non-disclosures or confidentiality breaches.
COMMERCIAL CONTRACTS

Commercial Contracts
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Like all other business entities, a social enterprise would, for the purposes of its operation,
be required to enter into various commercial contracts. These may range from contracts with
its suppliers, vendors, service providers and customers to contracts with its landlords,
creditors, banks, agents, distributors, franchisors and consultants, depending on the nature
of the business of the social enterprise. Common examples of commercial contracts include
contracts for the provision of goods and services, banking or funding facilities, procurement,
franchising, marketing, outsourcing, consultancy, operations and maintenance and tenancy.
Commercial contracts may exist in various forms or under various names letters of
undertaking, letters of offer, letters of appointment, memorandums of understanding, deeds,
agreements, contracts, heads of terms, term sheets, standard form purchase orders or
invoices, terms and conditions and any other appropriate name as designated by the parties.
However, notwithstanding the name or description accorded to a commercial contract, the
substance or content of the contract is the determining factor to:
(i)
(ii)
(iii)
the existence of a valid contract recognised in law (VALIDITY);

the binding nature of the contract (ENFORCEABILITY); and
the actual commercial terms agreed by the parties (AGREEMENT).
The primary purpose of a commercial contract is to identify and set out the actual
commercial consensus, arrangement, bargain, understanding or deal agreed between the
contracting parties. Commercial contracts are important to ensure the smooth and profitable
operation of a business entity. Apart from that commercial contracts also:
(i)
Function as the ASSET of a business, which provide value to the overall strength and
(ii)
sustainability of the business;

Function as the tool to SAFEGUARD the business entitys rights, interests, benefits,
(iii)
properties and resources in its commercial dealings with others;

Provide MEASURE for performance to ensure satisfactory or acceptable levels of
goods or service are provided through key performance indicators (KPIs) or other
(iv)
service level requirements; and

Provide CERTAINTY to protect
against
change of
economic and
political
circumstances or environment, including the increase of cost of resources, inflation and

change of governmental regulations.
What Is A Contract?
A contract in essence is the consensus, arrangement, bargain, understanding or deal
reached between the contracting parties primarily on:

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(i)
WHAT needs to be done by the party tasked with performing the primary obligation or
the party providing the services or the party undertaking the usage of facilities (THE
(ii)
PROMISE);
WHAT is the price, value or remuneration, monetary or otherwise, which is paid or
(iii)
received as payment in return for the promise fulfilled (THE CONSIDERATION); and
WHAT are the consequences for the non-fulfilment of the promise or non-payment of
the consideration, namely for breach of the contract (THE RIGHTS AND REMEDIES),
(collectively, the 3 WHATS).

There are of course other supplementary terms that may be required to be incorporated into
the contract to give effect to the 3 WHATS or to provide the manner and/or procedure by
which the 3 WHATS may be implemented or enforced, but the underlying basis is almost
always the 3 WHATS.
Contractual transactions in Malaysia are primarily governed by the Contracts Act 1950,
unless agreed otherwise by the contracting parties and stipulated as such in their contractual
documentation. The Contracts Act 1950 provides the basic legal framework for contracts to
ensure that they are valid and enforceable.
Under the Contracts Act 1950, an agreement enforceable by law is a contract.1 All
agreements are contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not expressly declared
to be void under the Contracts Act 1950.2
5 elements are commonly required for a formation of a valid contract:
(i)
(ii)
(iii)
(iv)
Proposal an offer to perform a task.

Acceptance an acceptance of that offer.
Consideration the payment or remuneration for the performance of that task.
Capacity to contract the parties legal capacity to enter into the contract, for example,
(v)
(a) for individuals - not a minor, no mental incapacity or not a bankrupt; and
(b) for business entities - not insolvent or a valid legal entity.
Intention to create legal relations the intention to be legally bound by the contract.
Must A Contract Be In Written Form?

Unless otherwise specifically required under any law to be in a written form 3, a commercial
contract may either be reduced to a written form or be simply verbal. However it is almost
always advisable to reduce all commercial contracts in writing for the following purposes:
1 Section 2(g) of the Contracts Act 1950
2 Section 10(1) of the Contracts Act 1950
3 Section 10(2) of the Contracts Act 1950

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(i)
CERTAINTY A written form provides clear and in most instances, undisputable
evidence of what was agreed between the contracting parties and as such reduces the
(ii)
risk of disputes.
EASE A written form provides for ease of reference to the contracting parties to be
(iii)
aware of their respective rights, obligations and duties;

WEIGHT A written form provides greater evidentiary weight or proof in the event of
(iv)
any dispute as to the commercial terms agreed by the parties.

COMPLIANCE - A written form enables effective compliance with accounting
procedures, regulations and filing or disclosure requirements which may require
substantiated disclosure from the business entity in respect of its commercial
(v)
contracts.
INVESTMENT - A written form enables the business entity to evidence its commercial
contracts as part of its assets or strength in the event of any future business dealings
including any investment in the business, sale of the business to a third party or to
(vi)
obtain funding from financial institutions.

PROFESSIONALISM A written form is reflective of the professionalism and standard
(vii)
of business of an entity and is the preferred choice of potential investors.

CAUSE & COST EFFECTIVE A written form provides a tangible platform on which
any cause of action may be initiated in the event of any dispute or claim arising from
the commercial contract. It will, in the long run, be cost-effective to produce a written
contract than to seek resources or personnel to proof verbal arrangements in courts.
What Is The Typical Framework Of A Written Commercial Contract?

The provisions or terms and conditions of a commercial contract must, at the very least, be:
(i)
CLEAR - The contracting parties must understand the details of the business
arrangement that they are entering into their obligations, rights and most importantly
(ii)
their liabilities. Any ambiguity could give rise to potential dispute and costly litigation.
COMPREHENSIVE The contract must seek to provide for all terms and
contingencies. Although it may appear to be arduous to provide for everything
exhaustively, however key terms must be identified and dealt with comprehensively in
(iii)
the commercial contract.

CORRECT The contract must be accurate and reflective of the actual arrangement
between the parties and provide factual context of the existing commercial
arrangement and resources. The contract must therefore be read, understood and
confirmed prior to execution of the same.

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(iv)
CREDIBLE The contract must be legitimate and lawful taking into account the
requirements of the Contracts Act 1950 (free consent, competent to contract, lawful
consideration, lawful object and not void) and the general requirements of law.
For ease of reference, we have provided a basic framework of a sample commercial contract
under Annexure 1 (at the end of this chapter). The framework provided under Annexure 1
consists of primary provisions which are commonly found in most commercial contracts.
There is however no standard form which requires all these provisions to be incorporated.
Each provision is dependent on the nature and requirement of the subject-matter for which
the contract is entered into and of course, the consensus between the parties to incorporate
the same. Samples clauses are provided for each part, for clarity and ease of reference
(NOTE: These samples are not exhaustive. They constitute excerpts of the long-form
of the relevant clauses. The samples are not intended to form a single template
agreement and have been extracted from various types of commercial agreements.).
How Can A Start-Up Social Enterprise Deal With Commercial Contracts?
1) LOOK at samples or templates (there are tonnes to be obtained from the internet) to
get an idea of what is commonly addressed and how issues are dealt with. Not all
samples or templates are applicable in all circumstances and as such must only be
used as a general guide. Additionally, most samples or templates, if obtained from the
internet especially, are foreign based sample or templates, mostly of American origin.
Care must be given to ensure that the local legal requirements is considered and
addressed to ensure the validity and enforceability of the contract.
2) READ carefully all terms of the commercial contract and ascertain if such terms are
reflective of your end of the bargain. Do not assume that all commercial contracts,
standard forms especially, would have sufficient provisions to safeguard your interests.
All clauses, including boiler-plate clauses, must be read and considered carefully.
3) SEEK help from legally qualified advisers if you are unable to draft, understand or
negotiate commercial contracts on your own, especially complex commercial contracts.
Although it may seem cost-effective for start-ups to attempt commercial agreements on
their own accord for the initial stages, however, if legal house-keeping, of which

4/3/2016
commercial contracts play a major role, are not addressed and kept in order right from
the beginning, the costs subsequently incurred to rectify the same would almost always
far exceed the so-called savings achieved at the initial stages.
NO.
1.
PROVISIONS
Parties
DESCRIPTION
Provides
the
description
SAMPLE C
of
the
THIS AGREEMENT is made on the 1
contracting persons or entities to the

contract, who have capacity to contract
(not minors, persons of unsound mind
BETWEEN
etc.) and who shall be bound by the

contract.
ABC Sdn. Bhd. (Company No. 123
incorporated in Malaysia and having
Menara XYZ, Jalan Magic, 98765 Ku

as ABC) of the one part;
AND
XYZ Sdn Bhd (Company No. 543
incorporated in Malaysia and having i
Cantik, 34567 Kuala Lumpur (herein

other part;
ABC and XYZ shall hereafter individu
collectively referred to as the Parties
2.
Recitals
Provides the background or intention of (1) The Company is a private compa

the parties in entering into the contract.
the storage and management of bu

NO.
PROVISIONS
DESCRIPTION
4/3/2016
SAMPLE C
(2) The Customer wishes to appoi
Services (as defined hereafter), i
conditions as set out in this Agreem
3.
Provides meaning to terms / phrases

Definitions &
Definition
used in the contract.
Interpretation
Unless the context otherwise req
expressions in this Agreement shall h
ascribed in the provision to which refe
Demised Premises - means the

of Botanic, Daerah of Klang in the
commercial address of No. 7, ZZZ

Klang.
Term shall have the meaning as

Agreement.
Interpretation
(1) In this Agreement, except to the

provides or requires:
(a)
a reference to a Party includes,
Partys legal personal repres

permitted assigns;
(b)
no rule of construction applies
because the Party was respo

Agreement or any part of it.
4.
Main Operative
Provisions (the
main commercial
Obligations
Provides the main responsibilities /
liabilities of the parties under the
In consideration of the payment of th
GGG Consultancy, GGG Consultanc
perform and/or provide the Agree

NO.
PROVISIONS
DESCRIPTION
terms)
4/3/2016
SAMPLE C
contract what do they need to do or
Company in accordance with the
be liable for doing.
Agreement, and to further:
(a)work diligently and act in a prop

performance and/or provision of
(c)
comply with all relevant terms, c
directives and orders imposed

authorities, bodies and/or agenc
performance and/or provision of
Consideration
Hundred (RM3,500) only, on or be
Provides the price or value of the
month of this Agreement, to the La
contract the returns received for
in this Agreement.
obligations carried out, whether in

monetary
terms
or
The Tenant shall pay a rent of Rin
otherwise
In consideration of XYZ Sdn Bhd
(remember however that it must be a
the License Fee and to make
lawful consideration).
Berhad in accordance with th
Agreement, AHGD Berhad here
License, subject to and in accord

specified in this Agreement.
Conditions Precedent
Provides the pre-conditions which need
This Agreement shall be subject to

fulfilling the following conditions:
to be fulfilled for the contract to come

into force / be effective.
(a) Obtaining a written letter of appr
Malaysia for the performance and/

to the Company;
(b) Providing proof of filing of its
Companies Commission of Malays

NO.
PROVISIONS
DESCRIPTION
Term / Duration
Provides the length or period for which
the contract shall be valid and shall be
performed.
Warranties
4/3/2016
SAMPLE C
This Agreement shall take effect
commencing from the date of th
terminated and/or determined earlier

conditions of this Agreement.
authority and power to execute
Provides the representations forming

the basis upon which either party have
been persuaded or have relied upon to

enter into the contract.
The Parties represent and warran
obligations under this Agreement.

The Supplier warrants that it has
the Products are delivered free of
The Consultant represents and w
and qualified to provide the Consu
this Agreement and possesses th
organization, knowledge, resourc
experienced and properly qualifi
providing the Consultancy Servic

with this Agreement.
Limitation / Exclusion of Liability
arising out of, in connection w
Provides circumstances under which
whether in contract, equity, negl
the liability of a party may be completed
limited to and shall not exceed the
negated or reduced either by way of

restricted time for claims, restricted
types of claims, capped amount for
The liability of the Supplier to the
Notwithstanding anything herein
be liable to the other for any l
claims or shift / transfer of risk to the
incidental, indirect, special, conse
other party.
aggravated loss or loss of profits.

Indemnities
Provides for circumstances whereby
The Distributor hereby agrees
harmless the Owner against any
(including any legal costs) incurr

NO.
PROVISIONS
DESCRIPTION
4/3/2016
SAMPLE C
one party agrees to cover the losses
result of any breach, negligent act
incurred
by
part of the Distributor, or its repre
compensating the other party or bearing
indirectly from the performanc
such losses directly.
Distributor or any of its represent
by
the
other
party
Agreement.
Each Party agrees to indemnify t
claims, actions, proceedings, su

costs, expenses (including legal
whatsoever arising from or in con
intellectual property rights of a
performing its covenants under th

Events of Default
An event of default shall be deem
Provides circumstances upon which a
occurrence of any of the following eve
party may be deemed to have defaulted

under
the
Agreement
breach,
(a) any Party commits a material br
insolvency, false warranties etc.
compliance with, any of the cov

that Party or any of the terms in
(b) any of the warranties given by
discovered to not be true and co
(c) any Party shall have a winding u

court of law and such petition
days after it is filed.
Termination
Provides for circumstances under which

the contract may be terminated
This Agreement shall automatical
the end of the Term, unless othe
further term in accordance with Cl
brought to an end. Some common
This Agreement may be terminate
ways:
in writing at any time during the Te
1) Automatic Termination (upon expiry
This Agreement may be terminat

NO.
PROVISIONS
DESCRIPTION
4/3/2016
SAMPLE C
of term / duration or completion of all
cause, and without liability of any
obligations)
2) Mutual Termination (by consensus
written notice to the other Party

the proposed date of termination.
of both parties)
3) Unilateral Termination (by notice of 1
party)
4) Events of Default (due to breach by
In the event any Party shall hav
(Defaulting Party) which is no
capable of remedy but not remed
one party).
one (1) month from the date of re
other Party (Non-Defaulting Pa
Defaulting Party shall be entit
forthwith by notice in writing to the

to all other rights and remedies
Defaulting Party under this Agreem
breach and/or default of the Defau
Consequences of Termination
Upon termination of this Agreeme

to forthwith pay all outstanding
Provides for consequences arising from
respect of Services already ren
termination of the Agreement and the
Company as at the date of t
actions that need to be taken in view of
Consultant shall arrange for all re
the contract coming to an end.
of the Company to be returned to
the terms and conditions of this Ag
Upon termination of this Agreeme
this Agreement, all obligations of
shall cease save in respect of a
which shall have accrued prior to
right or obligation of any Party wh
after the termination of this A
Clauses 5, 11 and 17 of this Agre

of this Agreement.
Confidentiality
Provides protection for the confidential
The Parties agree and undertake to
information, intellectual property, kn

NO.
PROVISIONS
DESCRIPTION
4/3/2016
SAMPLE C
information, especially the intellectual
data that may be exchanged, acquir
property, know-how and
arising under this Agreement (Confi
proprietary
processes, of a contracting party.
the Confidential Information is alrea
other than by breach of this Agreem
shall survive the termination of this A
Intellectual Property (IP)
that it possessed prior to the date
Provides for ownership of IP of each

party
utilized
in
the
commercial
transaction and the apportionment of
Each Party shall retain all existing
Unless otherwise expressly provi
will be deemed to have been gra
rights in respect of IP developed
any of its Intellectual Property.
through the commercial transaction.
Any Intellectual Property joined de

this Agreement shall be jointly
proportion.
Dispute Resolution
The Parties agree that all dispute
Provides the mechanism by which any

dispute arising under the contract shall
be addressed or settled amicable
settlement by parties, arbitration or
court proceedings.
Governing Law & Jurisdiction
shall
be
interpreted
or
determined and the place where dispute

settlement shall be undertaken.
amicably. Failing such amicable settl

out this Agreement shall be settled
accordance with the Rules of Arbitra

Centre for Arbitration (KLRCA).
This Agreement shall be governed by
Provides the law upon which the

contract
Agreement between the Parties sha
the laws of Malaysia. The Parties su
the Malaysian courts in determining a

NO.
PROVISIONS
DESCRIPTION
5.
4/3/2016
SAMPLE C
Boilerplate
These are clauses that usually appear
Stamp Duty
Clauses
at the end of a contract and address
The Company shall be liable to pay
other miscellaneous terms to assist in
execution of this Agreement.
the interpretation of the contract, to

provide validity, to further define the
relationship between the parties and to
expand or restrict rights and obligations
under the contract.
Amendments
No amendments or variation or modi
of any of the provisions of this Agree

unless it is in writing and duly signed
Entire Agreement
Usually boiler-plate clauses are clauses

on:
-
This Agreement and the Schedules a
agreement between the Parties with r
and supersedes all other written ag

Notices
Tax / Stamp Duty
Entire Agreement
Amendments
Severability
Counterparts
Cumulative Remedies
Time
Successors
Further Assurances
Waiver
Survival
Force Majeure
Assignment
made prior to the date of this Agreem

Counterparts
This Agreement may be executed in
be deemed an original and all of w

instrument.
Cumulative Remedies
The rights and remedies available to
cumulative and in addition to, not ex
rights or remedies otherwise available

Assignment
The Parties shall not assign, transfer
this Agreement and/or any benefits,
without the prior written consent of the

Waiver
The rights of the Parties shall not b
indulgence or forbearance extended
Party in respect of any breach shall

NO.
PROVISIONS
DESCRIPTION
4/3/2016
SAMPLE C
any subsequent breach.

Successors
This Agreement shall be binding on
the successors-in-title, permitted tran

Parties.

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MaGIC Social Enterprise Legal Handbook (Draft 1)

For value creation.

To avoid business disruption

MaGIC Social Enterprise Legal Handbook (Draft 1)

3. SUMMARY OF MAIN FORMS OF INTELLECTUAL PROPERTY

What does it cover?

What are the

Shall consist of at least one

MaGIC Social Enterprise Legal Handbook (Draft 1)

Original feature of shape,

New , it must not be

Not dictated solely

Not against the

Any information which is

Any trade formulae,

MaGIC Social Enterprise Legal Handbook (Draft 1)

MaGIC Social Enterprise Legal Handbook (Draft 1)

4. HOW INTELLECTUAL PROPERTY FEATURES IN THE LIFECYCLE OF THE SOCIAL

MaGIC Social Enterprise Legal Handbook (Draft 1)

PHASE 1: RISKS OF NOT PROTECTING INTELLECTUAL PROPERTY

MaGIC Social Enterprise Legal Handbook (Draft 1)

(2) Business goodwill will be affected and will lead to disruption.

to the goods or services of the social

MaGIC Social Enterprise Legal Handbook (Draft 1)

PHASE 4: DEVELOPMENT OF PRODUCT

MaGIC Social Enterprise Legal Handbook (Draft 1)

PHASE 4 RISKS OF NOT PROTECTIING IP

MaGIC Social Enterprise Legal Handbook (Draft 1)

employees for top confidential

MaGIC Social Enterprise Legal Handbook (Draft 1)

It is advisable to get the

MaGIC Social Enterprise Legal Handbook (Draft 1)

authorization to use it for the purpose required.

to use the IP if they are contributing to the project.

there are applicable conditions attached to the material.

keep chronology of dates.

the work is potentially covered by those obligations.

notification and the basis for it.

IP FREQUENTLY ASKED QUESTIONS

MaGIC Social Enterprise Legal Handbook (Draft 1)

5. What are moral rights of the author?

MaGIC Social Enterprise Legal Handbook (Draft 1)

MaGIC Social Enterprise Legal Handbook (Draft 1)

the existence of a valid contract recognised in law (VALIDITY);

sustainability of the business;

properties and resources in its commercial dealings with others;

service level requirements; and

circumstances or environment, including the increase of cost of resources, inflation and

MaGIC Social Enterprise Legal Handbook (Draft 1)

(collectively, the 3 WHATS).

Proposal an offer to perform a task.

Must A Contract Be In Written Form?

MaGIC Social Enterprise Legal Handbook (Draft 1)

aware of their respective rights, obligations and duties;

any dispute as to the commercial terms agreed by the parties.

obtain funding from financial institutions.

of business of an entity and is the preferred choice of potential investors.

What Is The Typical Framework Of A Written Commercial Contract?

the commercial contract.

MaGIC Social Enterprise Legal Handbook (Draft 1)

MaGIC Social Enterprise Legal Handbook (Draft 1)

THIS AGREEMENT is made on the 1

contracting persons or entities to the

etc.) and who shall be bound by the

Zain & CO - MaGIC SE Legal Handbook (IP + Commercial Contract)

Zain & CO - MaGIC SE Legal Handbook (IP + Commercial Contract)