Recently a non-regular client approached me after almost 1.5 years for seeking legal opinion on the almost broke relations with another partner in his partnership business and the reason to approach me is due to the fact that the relations were not in any possibility of gaining any good momentum for further business and it was just getting in personal and affecting per se. There were two partners at the time of initiating the fresh and new partnership business wherein my client was an experienced IT skilled and another partner was in marketing. It needs a mention that the business model of the said partnership was of my client solely and there was no contribution of another partner in any manner either as monetary investment or idea selling or else but was the partner in equal ratio and it seems that my client never expected the dispute will arise with another partner as another partner was someone own to my client since good years and he didn’t see it that way!
As it happens many times of business being done on trust basis which I am totally against (you can refer my article named “Is it risk-free to do business on Trust and no written contracts” and in this case too there was no proper documented term sheet written agreement but only the trust. No proper partnership agreement was drawn as the partnership agreement was just a copy and paste from online and filling the blanks with their names and business and just had a simple notary which was done to open the bank account and this was and is certainly very bad news for my client. There was no specific clause on ownership of Intellectual Property Rights, way of dealing of Intellectual Property Rights and without any terms agreed, it was and is no doubt very hard to work out what the real understanding between partners was at the time they got together and that makes even worse to bring the legal separation which is fair to both parties.
As I have stated in my earlier articles of no business to be done on trust and without written contracts, I will suggest of having proper documentation in any business relations and this may include any business relations as this document is nothing but can be said as “Documenting Your Relationship!” It is very easy to use a standard template from online nowadays but you need to have legal guidance to have properly documented all the intentions and business purposes as that ultimately will define at the time of any dispute arising.
It’s never too late to try to put an agreement in place, especially if the relationship is still good. And it’s time and money well spent.