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Forming Your New Business

1/14/2011
Seth Kramer
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Handshake Agreements

Here are a few (just a few) MAJOR problems with not having a contract:

1.  Management decisions:  when everyone agrees it's easy, but who breaks the tie when there are "artistic differences"?

2.   Profit and loss allocation:  if you have no written agreement, under the law, profits are always split 50/50 (even if you guys agreed otherwise).

3.  Services are not valued if you have no written agreement:  you provide the legwork, he provides the cash.  Without a written agreement, you will NOT get paid if there is any dispute.

4.  If someone tries to leave the company:  If there's no existing agreement or mechanism to determine who gets what, it will be impossible to split things fairly or to everyone's satisfaction.


Labels: business owners contracts management flexibility risk allocation why you need an attorney


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