The Fairy Tale Nature of the Perfect 1-Page Agreement

Posted on April 11, 2014 in Business Transactions

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Unless you’re working with microscopic font sizes, if you’re involved in a transaction of any consequence (and by that I mean consequence to you, not consequence to the national debt), I weigh in on the side of “fiction.”

Every time I’m handed a “short-form” agreement–like the eight-page partnership agreement a business owner (a lawyer!) asked me to review–I’m able to spot the glaring omissions where the business owner is vulnerable to a likely disaster.  It makes me cringe.  I want to be of service but, like the reaction to ancient Cassandra, entrepreneurs don’t want to hear the message.

Here’s the scoop.  Short-form agreements tend to focus only on the immediate business terms: What will you pay, what will they provide, what if you need to make changes.  S-o-m-e-t-i-m-e-s, agreements will add in a tidbit about where you’ll resolve disputes.

But they don’t cover the broader, harder-to-quantify issues such as confidentiality, intellectual property or indemnification (where the other side will step in to defend you if their actions embroil you in a lawsuit with others).  Now I don’t have a crystal ball, so I can’t predict whether these issues will come to pass or not.  No question, I’m a trained pessimist, so that’s my bias. As I allude to in my article, “No Nonsense Advice About the Perfect 1-Page Agreement,” a lawsuit over any one of these dark, swirling issues could put you out of business. Do you have the money to “self-insure”?

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