A Breach In Your Partnership Agreement
Some of us have had offers that sound like it’s too good to be true.
Before acting on that tempting offer, take a deep breath and sleep on it. After a good nights sleep we usually can focus more clearly on things.
Whenever you agree to enter into a business with someone and share profits and losses, you create a legal partnership.
Chances are that you have been thinking of all the benefits and opportunities you can obtain from that opportunity. Keep in mind that you probably will have to put money or other equity into the partnership.
You should consider, not only the things you can gain from the deal, but also what you have to lose if things turn out to be not as rosy as you first thought.
For example, you may have met with one of several partners who you have known for years. Do you know the other partners and how do you feel about them and their “good business” sense?
Anytime you consider entering into an agreement, there are several things you should consider and talk with an attorney about first such as:
Should you have an outside accounting firm do an audit prior to entering in an agreement?
Can the partnership be dissolved?
Does the partnership continue indefinitely or end on a specific date?
If the venture is to be resolved, how is that determined? (majority vote or can a partner’s interest be bought by someone else?)
What if one of the partners is negligent and causes the partnership to become liable for actions you did not approve of or contemplate?
If a partner violates your partnership agreement, what are your remedies?
What happens if you or one of the other partners dies or becomes incapacitated unexpectedly?
These are just a few of the things you need to think about and discuss with your attorney before entering a partnership.
A partnership does not have to be in writing to be enforceable, but a written agreement is easier to enforce. For your protection, your agreement should be in writing, the terms should be clear and properly executed with your attorney’s input and approval.
When it comes time for you to exit the partnership, you should again talk with your attorney to make sure when you leave, you are making a clean break.
The time you spend getting good legal advice before going into a new venture can save you a great deal of time, money and frustration later. Contact The Dean Legal Group at 702-823-1354 today.