Tag: Business contracts

buyout agreements

Buyout Agreements Should Be Airtight

As a business owner, you take on a multitude of responsibilities that may not have been part of the original starry-eyed dream; in fact, the world of commerce continues to become more complicated as human resources issues grow around the US, tax laws are ever changing, the economy is unpredictable, and the marketplace is fiercely competitive for most industries today. But what about issues within your own business foundation, such as partnerships? Whether you own equal parts of the company or you control most of it, solid business contracts should be created in the beginning.

The beginnings of any startup can be both an extremely stressful but forward-thinking time. Full of excitement and positivity for most, if you are working with one or more partners, it is probably like the honeymoon phase of a marriage in some ways. You can’t imagine ever dissolving your business relationship; after all, you are in it together. And partnerships in business do offer a wide range of benefits. You can share duties, share the stress, create products and services together, watch your company grow (not unlike a family), offset financial burdens as you work together in providing capital to the company, and set goals for the future. While the going is good, however, get that partnership contract in place, and cover all the bases—even if some of them may be uncomfortable in discussing what could happen in the future.

The partnership agreement should outline the typical basic structure such as who is involved and who will do what. Titles should be agreed on and included in the agreement, as well as payment and profit-disbursement structures. Even more importantly, there should be a concrete dispute resolution clause—and creating this while everyone is on good terms can be vital to the success of your business should there be a major falling out or even a lawsuit later. This allows you to discuss how a dispute would be handled, where, and even who would pay attorney’s fees. Along those lines, there should also be comprehensive clauses covering what happens in the case of dissolution and/or a buyout. Will you want the right to buy out the partner’s shares? Will they be able to hand down their shares to family members or others outside the organization? Just as the partnership felt like a new marriage in the beginning, dissolving or completing a buyout may feel strangely like a divorce. And you must work just as hard to protect your assets!

Along with having the business assessed properly for valuation, there will be significant paperwork to be handled by your business attorney. Keeping the situation as civil as possible can be key to everyone parting ways with success, and your lawyer acting as the negotiating party could be a vital part of this action. The key is to hedge your bets in the beginning and uphold your partnership contract to the end.

The Bolender Law Firm will advocate on behalf of clients through litigation, arbitration, or non-binding mediation. Our attorneys are experienced in representing clients in state and federal courts, at both the trial and appellate level. Call us at 310-320-0725 now or submit an easy consultation request online. We are here to help!

Business Litigation Issues

Business Litigation Issues: Why that Initial Contract Is So Important

In business dealings, three words are key: Get it in writing. Even though a handshake and a verbal agreement may seem like enough—and even though you may have heard that contracts are just made to be broken, you have a much greater chance for gaining legal recourse with a signed and notarized business agreement fully outlining the details of a transaction or ongoing relationship. And although an airtight business contract may be what allows you to win in court should litigation be necessary, it may also be what prevents a court case from developing to begin with.

A contract with a vendor would be a typical example where a business contract is helpful, as they are providing goods and services to you for payment. In working with your business attorney to create a solid agreement, focus on the following:

  • List all the individuals and companies involved in the agreement.
  • Use language that is clear, so everyone is in complete understanding of all the details. While every contract is prone to having some legalese, the agreement should be easy to read, with all parties involved comfortable in making necessary changes before signing.
  • Outline terms of the contract, and goods and services being offered, in as much detail as possible. Any necessary timeframes should be written into the agreement (especially if this is a finite deal with a beginning and ending date), along with the payment schedule. If there are grace periods for payments or penalties for late pays, make sure that is all explained in detail as well.
  • Create a dispute resolution clause. While this may seem unnecessary in the beginning—and especially if you are working with someone you have known for a while—creating a dispute resolution plan is much easier to do while everyone is still getting along! Deciding ahead of time how a dispute would be handled allows you to designate what type of setting you want any issues decided in, whether in court with litigation or a more casual setting in mediation or arbitration. Typically, location is included too, stating which county (or courthouse) the dispute would be settled in, as well as who would pay legal fees.

Creating a good working relationship with a business attorney as soon as you begin setting up the structure of your business can be vital to your success as you make decisions regarding what type of corporation or partnership you want to set up, begin hiring employees and contractors, protecting intellectual property, and more.

Do you need legal assistance with a business dispute? If so, contact the Bolender Law Firm.  Our attorneys are experienced in representing clients in state and federal courts, at both the trial and appellate level. Call us at 310-320-0725 now or submit an easy consultation request online. We are here to help!