 Legal Best Practices
Magazine
Friends & Family Law
By Gale Moore, Esq.
Published: December 11, 2008
When entering into a
business partnership with a spouse, relative or friend,
it’s natural to be excited. Thinking about getting the
business off the ground and looking forward to what the
business will bring is part of the initial rush.
Unfortunately, many people who enter into a business
partnership with a spouse, close relative or friend do
not take into consideration what could happen down the
road if the business changes. Discussing items such as
business dissolution, disputes and financial risk are
not always on the minds of some new business partners.
So it is essential that you take every step necessary to
secure your business and your personal relationships.
The first step is to sit down and talk with an
attorney.
You should consider all the details of the partnership
to make sure each party understands each one’s role,
priorities and goals for the business. Allow the
attorney to ask you questions that could help reveal
future situations not yet identified.
For example, what is to happen if one partner begins to
show that he or she is not performing to the fullest
role of a business partner, and what steps are to be
taken if the partner does not correct his or her
actions?
Planning these situations out in advance, however uneasy
to talk about at first, will help alleviate the future
stresses that could arise and most importantly protect
the personal relationships between the parties involved.
The first step is to draft an agreement that outlines a
general overview of how the business is set up and how
it intends to grow. This is important because priorities
may shift or go in different directions. The agreement
identifies how a modification to the business structure
or goals should take place. It should outline what would
happen if a business partner begins to fail at duties or
not act as an equal business partner – business
dissolution, partner buyout or the ability to
renegotiate terms of the business.
An agreement will also put into place terms on executing
the agreement such as what law applies, if a dispute
arises how it will be handled in state or federal court,
as well as if priorities change if the agreement is
still valid in whole or in parts.
You will set up at the beginning each parties' rights
and obligations towards one another. They can deal with
everything from who gets to keep the furniture if the
business closes, to where the business will operate, to
expected work performed or hours contributed by each
party toward the venture. Again, this can help alleviate
bitterness, anger or frustration between the two people
that will effect the established personal relationship.
It is important to know that despite the best intentions
of the parties at the time an agreement is signed, the
contents of the agreement may still wind up being
evaluated by the court and sometimes changed, if one of
the parties later has a problem with the agreement.
While the court will pay a great deal of respect to any
written agreement, if an agreement is unfair or becomes
unfair the court may be willing to look into things and
perhaps make an order that is different than what the
parties agreed to in their agreement..
Executing a business agreement is essential to a
business partnership – especially if the business is
with a loved one or spouse. It will allow all parties to
see each other on an equal playing field and show how
each contributes equally to the business. It creates a
win-win situation for everyone involved by establishing
a full disclosure and understanding. It helps to show
that amount each business partner relies on the other.
Most importantly, when going into business with a
spouse, relative or friend, the personal relationship
needs to be protected. Writing up an agreement in the
beginning will lower the emotional stress of business
changes because it is all laid out and agreed upon in
the beginning.
Gale Moore attained a Bachelor of Arts in Political
Science from the University of North Carolina at Chapel
Hill in 1990 and acquired her law degree from Stetson
University of Florida. Upon attaining her law degree,
Ms. Moore became an Assistant Public Defender in
Pinellas County and in 1998, Ms. Moore began private
practice which has developed into a focus on family and
estate law matters.
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