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I have a new business!! Do I need a partner contract?

Provided by:  Jennifer Kirschenbaum, Esq.

February 8, 2018

 

Question:

Hi Jennifer, 

I am starting a new venture with a partner, separate from my practice.  I am going to be selling vitamins.  Do I need a contract with my partner?  

Thanks, 
Dr. D

Answer:

Depends how much trouble you would like to have later, I guess.  An Operating Agreement or Shareholder Agreement (for a company or shareholder agreement) are business prenups.  A "new venture" is a marriage with whoever you choose to go down that path with.  A cardinal rule in law practice and life I ascribe to is: its a lot easier to amicably plan for separation in advance then to duke it out later.  So, while you're excited and starting up, it would be a pretty bad idea to skip the papering part.  You'd be building your house in a flood zone with no stilts or foundation.  The issues covered by an operating agreement or shareholder agreement are: who owns what, who can do what without the other's involvement, who has to put up money and when, who gets money and when, how do you get out and with what, and some other pretty important points.   

Also, don't forget before you start drinking the coolade of anticipated success and billions, there's a chance you might have signed something that allows someone else (an employer or other partner from a different business) to have rights to your new enterprise.  Make sure to check or have your employment agreement checked to see if you have any restrictions. 

As to whether you can buy an agreement for legal zoom or download from the internet, well, I don't know, did you order your spouse online with no profile, meeting or background check?  If so, sure, that might be the path you elect to take.  

Each arrangement is somewhat different.  Best way to get my take on a new project - shoot meJodi or Michael or an email or give us a call.  Or, contact Taryn at (516) 747-6700 x. 310 or TCrimi@Kirschenbaumesq.com for her to track us down.  


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