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Tuesday, November 16, 2010

always, always, make a detailed contract

Another tale of partners in an entrepreneurship, whose ways got separated, and will now mark the final farewell in court.

Without getting into the details, the lesson drawn in this tale is simple: "Always Insist upon a detailed contract".

Now, this is not always easy to do, especially in the early stages of an entrepreneurship. Efforts directed at formalities are ones that do not go into the work itself. Sometimes differences in opinions that could have been bridged later on create such tensions that groups break up without producing anything of value. And naturally, making a really good contract requires money.

But working without a detailed contract mean you may end up the way that tale, at the beginning of the post depicts....

So what can we do?

Some people believe that the solution is to choose only good people. But we all know how people may change when huge sums of money might be involved. And the solution to that is clarity. You don't need a lawyer to set up a simple document, setting the borders, intentions, and limitations. If you see you get into corners, a lawyer may save a lot of time, but to begin with, if you contemplate between the "it will be ok" to the "lets draft something up" approach, I'm all in favor of the drafting something approach. Just like any other formed of documentation, some form of expressed intentions is better than nothing, when the time comes and it is needed.





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