How I Help: What Makes a Contract "Good"?
My clients Judy and Tracy are forming an accounting firm together and found an operating agreement online. They asked me if it was good.
I get this question often... so, what makes a contract good?
It’s not that it has many pages of dense legalese. It’s that it achieves its purpose.
I’ve seen many operating agreements that only cover how contributions and distributions will be made.
While that’s important, it’s not enough. What will happen to their accounting firm if Tracy is forced to sell her business interest to her husband (who is also an accountant) as part of a divorce, or if Tracy dies and he inherits her interest? Will Judy want to keep practicing with him as her new partner?
Judy would rather have the option to buy Tracy’s interest, than have her husband as her new partner.
Have you ever had a time at work when you had an unexpected result? Most of us want to know what to expect. It's the same thing with a contract.