Before the main content, I wanted to mention that Shakfeh Law’s Tampa office has been open for a little more than a year. During that year, we have represented local, national, and international clients in cases ranging from homeowner’s associate disputes to breaches of million dollar contracts for clients with locations across the globe. We hope to continue to serve clients who need legal representation across the Tampa Bay Area.
Back to business. Lawyers will often put emphasis on the quality and airtightness of a partnership agreement. The two benefits of a good partnership agreement are that (1) it clearly establishes the duties of the business partners so everyone knows what to do and (2) it may help protect the legal rights of one against the other in case there is a falling out. However, even in cases where an aggrieved party is legally correct, pursuing rights in court is a big headache.
Let’s examine the case of Daryl Dogood and Charles Ponzi when they go into business together. They agree in clear terms in an airtight contract that profits will be split 50/50. However, Daryl takes all the money and runs off with it (the key to humor is surprise) to the remote country of Uncollectablestan. Getting a judgment against Daryl would not be hard. However, it could become hard if Daryl put up a fight and made Charles go through a bunch of procedural loops. In the end, Charles could likely get his judgment. However, after getting the judgment, he’ll then have to collect. Daryl and the money are in a remote country with no kind of treaty with the United States recognizing foreign judgments. He could sue him in Uncollectablestan but good luck. Now Charles paid a significant amount of money for a judgment that means nothing.
Let’s look at the case if Charles did this right. If he had done a background check or asked for references on Daryl, he might have found out that he is a serial money embezzler. Further, if there was some kind of protection on the bank account requiring the signatures of all parties on the account, then Daryl wouldn’t be able take all the money and run off with it. It may be cumbersome at times but it may be worth the extra trouble when doing business with someone you’re not familiar with.
In sum, make sure you know who you’re dealing with and set up business procedures that protect you.