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WEB/DIGITAL PRICELESS LESSON: Attorney Documents vs Verbal Discussions

Discussion in 'Business Models, Niches, Industries' started by MJ DeMarco, Aug 30, 2007.

  1. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Here's a quick lesson for all you guys out there who are engaged in buying and selling business assets ...
    • When negotiating, what your opponent "says" or verbalizes in negotiating is totally irrelevant.
    • What is relevant is what is stated in the legal documents provided by the attorney.
    From my own experience, countless times Ive had verbal agreements and understandings evolving from a discussion, only to receive a 50 page legal document that consummates the transaction, to which it reads TOTALLY DIFFERENT.

    For example, "Sure, we can set return of capital at 10% in the operating agreement for all members of the LLC".

    Then upon review of the actual legal document that seals the transaction, it says "return of capital of 5% and only to voting members"

    You can't under estimate the value of an attorney who can guide you through these documents and explain to you, in plain English, what they mean.


    You said "this and that" is not relevant -- what is relevant is what is stated in the legal document that you ultimately sign.

    If a disagreement arises, this document will decide what is correct - not what was said over coffee at the Starbucks.
     
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  2. aptohosting
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    aptohosting Contributor Read Millionaire Fastlane

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    Well said, they tried pulling a similar stunt when I was selling my previous website. I was still going to hold on to the intellectual property, but they put in the contract that they would obtain 100% rights BEFORE payment in full :)
     
  3. LamboMP
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    LamboMP Bronze Contributor

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    Good information!
     
  4. Rawr
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    Rawr Gold Contributor Speedway Pass

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    One of my friends just got hosed big time on his business in FL. Apparently the lease for the place was set up in a way that allowed owners to come and claim all the equipment, all the money in the safe and the rest. I don't understand how that could have happened, but these guys went from making $$$$ to eating ramen once a day overnight.
     
  5. wildambitions
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    wildambitions Bronze Contributor Read Millionaire Fastlane

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    It appears that this lesson may be applied in ALL areas of life. I have found that as problems of communication clarity arise, a simple memo for record documentation can often be used to clarify and move away from any problems towards a resolution. It seems too many people now-a-days cannot articulate clearly what it is they are trying to say and thus the intent of the conversation is missed.

    Note: Another lesson in this then might be to also be sure to read whatever documentation is presented to oneself so as to not miss what is actually written!:bgh:
     
  6. Rawr
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    Rawr Gold Contributor Speedway Pass

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    I think when it comes to general agreements two things I've learned the hard way are:

    1. You must establish specific and concrete rules and stipulations. Without specific expectations everything is fluff.

    2. Writing things down is how you get people to keep their words.
     
  7. venom
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    venom New Contributor

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    Contracts tend to favor those that write them.
    One of the reason many people will try to push their contracts on you.
    Thats why you need the standard come back. If we cant use my contract then it will have to wait till my attorney reviews everything.
    Something I learned the hard way. Even though I had been told this before.
    Rob
     

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