When money is involved, there should be a contract or a legal agreement binding all the parties even if the parties are Siamese twins, siblings, husband and wife, childhood friends, family members, church members etc. No matter how closely related you are, once there is money involved and parties have to work together, pull their resources together, and invest their time, resources and energy together in other to make money or to earn some profits, there should be a legal contract spelling out the responsibilities and duties of the partners or the parties involved, spell out who contributed what and how the profit or the return on investment should be shared amongst the parties once the profits start rolling in. 

Why it is important to have a legal agreement or a contract drawn up even if you are going into business with your blood relative or long-time buddy because talking from experience, I have seen childhood friends turn into enemies through the course of their business dealing and they started dragging themselves in court over who gets what. Immediately one of the parties feels cheated, it will lead to resentment and sometimes leads to a court battle and it becomes complex to handle when there is no pre-existing contract that spelled out who gets what. 

I have handled a series of briefs where the parties involved were ex-husbands and wives. They started a business together and when their relationship went sour since there was no contract in place regarding the business they started together they engaged themselves in a legal battle as to who gets what. 

There is this popular airline in Nigeria, they have the popularity for being the cheapest airline to fly with currently in Nigeria (I am intentionally leaving out the name of the airline but you should know them). The founders are childhood friends, born and raised in the same village but they are currently dragging each other in court over who gets what in the share and profit of the business. The case has been in court for years now and it’s not looking like it will not end anytime soon. The reason why they are fighting in court is that they placed their existing relationship as childhood friends in front and failed to draw up a legal agreement as to how to pool their resources together, fund the project and how they will be entitled to their return on investment. Their legal battle is having a serious impact on the company and if not resolved soon it will force the airline to be shut down. 

The easiest way to avoid all these is to at least create a partnership agreement. This partnership agreement should contain the following; 

Name of the partnership or the business 

Names of the partners and their details 

Purpose of forming the partnership/ business 

Responsibilities/ job requirements of partners 

Financial contribution of partners 

How and when proceeds or return on investment are to be shared amongst partners (who gets what and when). 

Process of adding a new partner or removing an existing partner

How dispute is to be resolved amongst partners when a dispute arises 

Duration of the partnership and how the partnership will be dissolved of the project is time bound

Agreement as to openness for the acquisition of the business, etc. 

Once there is an agreement containing at least the above information, if there is a dispute or disagreement which is bound to arise, the partners will always refer to the agreement as a rule book, standing as a reference or guide so as see how to navigate the ship during the storm and if the disagreement becomes unresolved amongst the partners and it ends up in court, the court will always refer to the partnership agreement in settlement of the dispute. 

Consult a lawyer today to draw up a partnership agreement or a contract for you and your partners before you invest or join that project.