Verbal Agreements = Disaster!!!

I just got off the phone with a client who started a beverage manufacturing business. He and his wife had entered into a partnership with another couple with the plan of pooling time and money to start and operate the business. The verbal agreement began in July, and we formed a new LLC and added the Buy/Sell and Partnership Agreement. One partner had experience, having recently built and sold a successful beverage business.  hank goodness we did the Buy/Sell and Partnership Agreement at the inception of the business.

You see, as we were completing the questionnaire for these agreements, we uncovered a series of problems with roles and responsibilities. What was expressed verbally was mistaken. As we were completing these details in writing, the problems started. I don’t want to bore you with the details, but these “Business Partners” quickly realized that they were not compatible, and there were clear misunderstandings. 

Let this be a lesson: always have written agreements at the onset of any business or investment with partners. Whether it’s a friend, family member, or business associate, get on the same page immediately!  I’m sure many of you will be pooling time and money to start business ventures or even making investments. It’s so very important that we do not rely on verbal agreements. The dullest pencil is always better than the sharpest mind!

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DISCLAIMER: The above material has been prepared for informational purposes only, containin opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.