At Shakfeh Law, we believe in the old saying that an ounce of prevention is worth a pound of cure. One way to prevent needing the cure in contracting is leaving a paper trail in contracting and in the execution of business contracts.
One very telling example of this is where potential business partners contract to form a business and the partnership agreement requires the partners to contribute capital, without specifying what kind of capital. Even worse is where the partners provide liquid capital to the business without receipts. Always get a receipt. There are two potential problems that may easily arrive and could be prevented by leaving a paper trail.
The first problem is that neither partner can prove nor disprove that either partner contributed the agreed capital because the agreed capital isn’t specified. If there is a dispute, there could be a very costly discovery process and risky trial that’s likely to make both parties unhappy. After all, civil court are just an expensive way of making everyone unhappy.
The second issue is whether the capital was even provided. If cash or supplies are provided without proof of receipt, then the party receiving the cash or supplies can possess themselves of it and, if brought to court over the matter, the Plaintiff will have trouble proving that it was provided.
As a general rule, having an attorney look over business contracts can save a lot of money and headache. Either way, always be specific about quantity/price and always have some way of proving that the other party received what you gave them from you.