Suzy* is a long-time friend of mine wishes she had obtained legal advice before signing up to a business deal.
Her first mistake was trusting her business partner had her best interests at heart. She learned the hard way that he did not.
Suzy thought that because her business partners lawyer had prepared the documentation that everything would be in order. We actually discussed the deal before she signed up and I strongly recommended that she should get her own lawyer to review the documents.
When things went wrong in the business and her partner was taking all of the profits, she came to see if I could help.
I was alarmed when I read the contract. I was beyond puzzled as to how anybody could have signed such a deal. The arrangement was a very one-sided. Suzy was required to put in long hours and basically do all of the work in the business, while her business partner had very little obligation in relation to the business. Also, somehow, my friend was responsible for any debts in the business, if the business could not manage to pay the debts.
When I asked her why she had ever agreed to such a deal, she explained that her business partner had told her verbally that he would be there for her and would assist and made sure that the business ran smoothly. Unfortunately, things did not turn out that way.
Suzy never expected to be taken advantage of, so she had nothing in writing to say that any part of the written and signed contract did not apply. She was stuck with a very bad deal.
She spent tens of thousands of dollars buying into the business, and after two years still has not seen a single month of profit.
If only she had had the contract reviewed by her own lawyer before signing it, there were many alarm bells in the contract that a lawyer would have picked up on. In my view, the agreement was so one-sided that it indicated to me that her business partner might not be the right fit for her. At the very least, her lawyer could have had the agreement amended to make it more evenhanded.
We are going through the expensive, complex and stressful process of trying to get Suzy out of the contract. Unfortunately, her business partner is being obstructive and making the entire process unnecessarily unpleasant.
Suzy was unaware of the meaning of much of the agreement that she signed, she was simply so excited to be going into business with a friend that she naïvely believed that her friend would never take advantage.
Suzy hopes that her story will serve as a warning to others wanting to go into business with a friend that each person should have their own legal advice to make sure that any agreements actually reflect the intention of the parties.
Book a free 15 minute telephone consultation with Cathryn by clicking this link to Cathryn’s calendar
Cathryn Warburton is an internationally award-winning solicitor, patent attorney, mentor, author and speaker. She is The Legal Lioness with a passion for safeguarding her clients’ business and intellectual property interests. She founded Acacia Law when she realised that law firms run by old men were too inflexible to empower her to tailor her legal solution to each client’s needs. www.acacialaw.com
* For privacy reasons, some details may have been changed. Please note that this blog is provided for general informational purposes only. Each legal situation differs. Reading this blog cannot replace obtaining specific legal advice. We recommend that you obtain legal advice for your specific situation.
