Contracts and legal question.

[j1979]

Someone has sent me a contract to sign, as we are forming a company. there are 3 of us that have a main stake, 2 are American and me from the UK. we have only just started and are already arguing.

we had agreed on a specific percentage split between us to be signed up. but the person pushing the contract has added various mathematical equations into the contract, to manipulate the split of potential profits (if any).

I am not singing it obviously, but are there any laws out there to stop people pushing a contract, without outlining that is actually very different from what was agreed. He is sending me angry emails, asking me to hurry up.

thanks for reading.

[peterb]

I am not a lawyer.

But, if you don't like the contract - don't sign it. Or at least don't sign it until you have run it past a lawyer who has experience of company law in the jurisdiction where the company is based. I guess this is the partnership agreement?

Have you already formed the company? Is is a limited liability company (i.e. incorporated or registered with Companies House in the UK) and if so, are you a shareholder? What is your shareholding?
In many cases a limited liability company makes things easier - you become an employee of the company as a director, and can aree a salary. You can declare dividends out of profit that are apportioned according to your shareholding (Three of you, one share each, you get equal dividends - your shareholding might depend on the amount you each invest to start the company of course)

But bottom line - don't be hurried if there is something you don't understand, or worse, don't trust. Much easier (and potentially less expensive) to walk away before you sign, than try to extract yourself afterwards.

[Lucio]

Depends on how far down the line you are already, but now might be the time to extract yourself. If it's too late to get out of the venture, then no, you can't simply block all communcation with this other person, no matter how disagreable his comments are. Once you're a director or buisness owner then you have responsibilities to the company.

Your best bet now is to seek legal advice, get an experienced third party to go over everything and find out what you do, and don't have to do.

[Saracen]

I, likewise, am not a lawyer.

But I'd make much the same points as Peter .... plus a couple.

First, if there is any law preventing them/him from saying one thing and putting another into a contract, it's news to me. The duty is on each party to be sure what he/she is contracting to do.

Second, are you SURE that what the contract says is not what was agreed? One possibility is that they're pulling a fast one. Another is a genuine misunderstanding between what you think was agreed, and what he/they think was agreed.

Third, and this is my personal opinion .... if I was SURE that we clearly and thoroughly agreed one thing, and that they're trying some duplicitous trick to twist it, I'd be VERY seriously reconsidering whether I wanted to be in business with them under ANY circumstances. So, I'd want to be sure about point 2.

Which leads me to a fourth point. Who has direct control over what gets distributed as profits?

An old adage says that possession is nine tenths of the law. If you have control of the funds, then you know you can act fairly, and they have to take you to court to try to change things. But .... regardless of what the contract says, if you're relying on them giving you your due, do you trust that they actually will, if you already think they're tring to shaft you? Because if they don't .....

Remember, even winning a court judgement can be the easy bit. Getting it enforced can be a LOT harder, and much more expensive, especially in a different country/continent.

Given the tone of your post, is getting involved something you're SURE you want to do, at all?

[j1979]

Thanks Guys!

Sound advices as ever

I have renegotiated and we have agreed to split the company, so that we have a mutually agreeable deal. All parties are now happy and no US UK Tax headache.

[peterb]

Ah good, thank you for the feedback. Just so long as you are happy that you have safeguarded YOUR interests!