12 WARNING SIGNS YOU’RE HEADED FOR A LAWSUIT WITH YOUR PARTNER JEFFREY H. LERMAN
field blindfolded and headed for disaster. Solution: hire a competent lawyer and get your agreement in
writing…yesterday!
#3: Written Agreement Without Clear Definition of Who’s Contributing What
OK, so you’re feeling good that you already have a written agreement with your partner. The problem is that if
the agreement did not adequately address key points, such as who is contributing what to the joint venture in
terms of time, money, property or effort, then that void creates a fertile ground for future disagreement. What are
the odds that your agreement is missing such key items? Unfortunately, it happens all the time. Solution: amend
your agreement with a competent lawyer (consider using a different one than the one who drafted up your
defective agreement in the first place) - ASAP!
#4: Written Agreement That Does Not Address Cash Calls
All too often, written agreements fail to address this sensitive issue: What happens if, despite your best-laid
plans and projections, your venture ends up needing more money than you planned and originally contributed to
capitalize your deal? Perhaps the venturers do not want to consider this possibility up front. Regardless, it
should be discussed and the agreement documented. If your agreement does not address this, then when storm
clouds start to form over your venture, you are headed for a tough discussion with your partner that could result
in a lawsuit. It may not be too late. Sit down with your partner right now and have the discussion you should
have had when you first got together…and document it!
#5: No Tie-Breaker Mechanism
If your venture is made up of just
two partners and you each have
a 50% vote on any issue, there is
the potential of deadlock. What
happens
if
you
just
cannot
agree? On a minor issue, you
might be able to avoid a serious
dispute. The bigger the issue, the
more likely it is that you will end
up in a lawsuit. Solution: Try to
agree that one of you ultimately
has control on all decisions. Often,