Business is easier to do when people are getting on yet it pays to keep everyone happy when relationships start to falter. This article is about money, the fact that it talks when opinions differ and why it is a foreign language for some.
Welcome back, or if you’re new here sign up to our RSS feed to receive insurance tips, new posts, plus details of events and promotions that could help you or your network reduce the risks facing their organisation.
I’ve had an idea… but I can’t do it on my own
Inventors are not just stuck in sheds. Some of them are hugely creative and have big idea after big idea. I am contacted by inventors when they want to protect an idea they’ve created. Most of them are in “start-up” mode and it takes time for the income to pour in.
However, they still need services to help them lift off and it is not uncommon to reach bartering agreements or agree profit or equity shares with those that help them out. Wonderful isn’t it? In an ideal World, yes, in the real World it depends. Recently, I’ve been contacted by two different companies who both had similar issues with such agreements. They were both being taken to court when such “contracts” had gone sour, they were very loose unwritten agreements.
We can’t agree about everything
But it pays to sit down and agree the basics. The first indication that something was going wrong was the receipt of a legal document outlining a case of a service provided that hadn’t been paid for. In each case the inventor thought they had “come to an agreement” yet the complainant asserted that nothing had been written down and they expected a prompt realisation of profits, which is rare. Both inventors were upset as well as being annoyed. One was being asked for £40,000 in fees for work they had “ordered”. The other was being invoiced for £18,000 fees for time spent “assisting” the start-uo.
Even after the first legal notice was issued, the inventor contacted the person that was “owed” the £40,000 and came to another agreement. They were somewhat surprised to learn, soon after, that the complainant had obtained a judgement against them and bailiffs were chasing them for money they didn’t have. Sometimes, the courts do odd things. Launching an appeal has proved fruitless for at lease one company facing a wind up order. Their business was closed down by a judge before the appeal date arrived. It is beyond belief.
You owe me, I sue you
Eventually, the money was found yet it had been earmarked for marketing so the launch had to be delayed in one case. The debts were paid when they may not have been legally liable to pay them. They were forced to settle because they didn’t have the resources to defend themselves.
Defending yourself doesn’t have to be ridiculously costly but it does take up time. High quality legal resources have to be paid for. It’s not only about what you sign, it’s about what you agree. Verbal agreements are often considered binding by one party and failure to defend a corner means louder voices are likely to be heard. The balance between defending and paying up doesn’t always leave defendants between a rock and a hard place. I have plenty of clients who have successfully defended spurious allegations.
Wrap up: Contracts aren’t always big documents and verbal agreements are often taken seriously. It’s really difficult to juggle all the tasks when unexpected legal issues arise. Not to mention the upset if you don’t know where to turn.
Top Tip
Do not ignore issues that are on the “too difficult list”. They have a habit of resurfacing and investor shareholders hate that too. It is not fair but the deepest pockets usually win.
