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Tobin O'Conner & Ewing Practicality in Practice
  • ~ Washington DC Business Law Attorneys ~

New Years Resolution: Read Several Drafts of a Business contract Before You Sign

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We have finally made it to the end of 2020, and 2021 promises to be a new beginning with new opportunities.  An identifying characteristic of successful entrepreneurs is that they see challenges as opportunities; when they see a need, they find a way to meet it.  It is too soon to know what they are, but new business trends will rise from the ashes of 2020, which has been disastrous for so many industries.  Maybe you are at the vanguard of one of those business trends.  Perhaps you and your business partners know just what our screen-weary eyes need.  The world is as eager to see your great idea as you are to show it, but before your business launches, get all of the terms of the agreement in writing.  Ask your prospective partners if a certain clause means what you interpreted it to mean; if their verbal explanation doesn’t match the written text, amend the text, then discuss it verbally, and so on.  Nothing can sink a business venture faster than misunderstandings about the role and rights of each of the partners.  If you are launching a business venture in an emerging industry, contact a business law attorney.

The Medical Cannabis Dispensary That Tanked Because of a Hazy Partnership Agreement

In 2014, Maryland started accepting applications for permits to open medical cannabis dispensaries, and Blair Stutzman attempted to apply for a license with two men with whom his primary care physician had connected him, namely Ahmad Mines and Marcus McKay.  Stutzman offered to put up most of the capital for the applications and other startup costs, while Mines and McKay would do most of the work of preparing the applications.  Stutzman’s plan was that, once the application process was complete, he would sell the company to another investor with more experience in the medical cannabis industry.  Stutzman offered Mines and McKay one third of the net profits from the dispensary, no equity and no voting rights.  The parties would later dispute whether Stutzman had meant that he get two thirds of the profits while Mines and McKay shared the other third, or whether the three men would split the proceeds evenly.

The parties disagreed, or misunderstood each other, about several other issues as well, but the trouble really began in December 2016, when the application got approved.  Stutzman tried to oust Mines as a partner in the company, but Mines refused.  Mines and McKay then sent Stutzman a certified check for an amount of just over $20,000 (an amount he had previously requested from them) with a letter rescinding their partnership agreement.  Stutzman returned the check and rejected the offer to rescind.  The case went to trial and then to the appeals court, which noted in its decision that Stutzman’s testimony was inconsistent and self-contradictory, and therefore not credible.  It remanded the case to the trial court.

Let Us Help You Today

When you are starting a new business partnership, you can never work too closely with a Washington DC small business law attorney.  Contact Tobin, O’Connor & Ewing for a consultation.

Resource:

scholar.google.com/scholar_case?case=273363909881342571&q=llc+partner+breach&hl=en&as_sdt=4,21&as_ylo=2010&as_yhi=2020

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