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Do I need a Buisness Lawyer to view my contract?

Asked over 2 years ago - New York, NY

I'm planning on opening a Hair Salon with an associate. The business contract stipulates that the start up capital is funded by my associate and $0 next to my name. Also, That I will not be held personally accountable for the recoupment of the money. But, The money will eventually be paid back from the business itself. Also, all income provided to the Salon will be split 50/50 with my associate. My concern is that I am the Stylist with the Knowledge and Experience to build the business and also to keep it running. So should I sign the contract or have it revised? And about the recoupment, if it's to be paid back in full how will I be compensated for my Knowledge that I'm bringing to the business. Especially, if everything is going to be split 50/50.

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Attorney answers (3)

Steven Alan Fink

Reputation Level 20

Answered over 2 years ago. Contracts / Agreements Lawyer in Newport Beach, CA.

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Your questions show why an attorney is needed. In addition, what happens if you want to leave that business and open your own. Can you or are you a prisoner of your associate? what about if one of you dies or you become disabled? What about retirement. You need a Buy-Sell agreement.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change.

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Ellen A. Victor

Reputation Level 12

Answered over 2 years ago. Estate Planning Attorney in Garden City, NY.

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Mr. Fink is correct, and additionally a business lawyer will be able to advise you as to the best way to protect you from becoming personally liable should something happen in the business. Without forming a legal business entity you could become liable for all the decisions made by your "associate." Legally, what you are forming will be a partnership and would leave you personally liable for all business decisions and debts made by your partner.

Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

The Law Office of Ellen A. Victor

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Kaiser Wahab

Reputation Level 14

Answered over 2 years ago. Business Attorney in New York, NY.

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To piggyback off the other useful suggestions here, allow me to add the following. This is a "partnership" that you are describing. And all partnership arrangements (especially those with asymmetric arrangements between the partners) require able legal guidance/review (which you might have, but it is implied that you did not). There are manifold issues that need to be addressed:

-Limited liability as you mentioned;
-Equity ownership, as well as profit (you own 50% of the profit, but do you own fifty percent of the company proceeds if and when it's sold?
-Do you own fifty percent of the losses to be taken as a deduction on your tax return, etc.;
-Exit strategies--the right to sell your share to 3rd parties and vice versa;
-Who has the right to use the Salon trade name?

And these are to name a few. I would definitely suggest that you, or you both, seek counsel to help you structure this in a fashion that is thorough and scalable.

I hope this helps.

Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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