Corporate and contract formalities are important, and often overlooked or minimized. If you don’t memorialize the terms AND ensure that all the parties have validly executed a partnership agreement, you can expect to have headaches, at a minimum, and you could put significant rights or investments at risk. Failing to sign documents or properly prepare them can lead to disaster. From time to time, I handle disputes in which agreements or entity documents were unsigned, or badly written. Just this year, I had several matters where the parties involved simply did not the execute agreements that were designed to prevent their disputes or resolve them if they did arise.
Unfortunately, clients sometimes gloss over formalities without thinking through the consequences. If you fail to properly execute and maintain your corporate governance documents, for example, the shareholders of the corporation could be held personally liable for business debts. You might be precluded from resolving a dispute among the LLC members if you haven’t executed the operating agreement.
The same can be said for other documents like estate plans. Yes, you need to get that amendment to your trust signed and notarized.
Why is this important?
Attorneys assume that every contract must be proven in a court of law. read more
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