What to do if we’re getting ready to sign a major life changing contract but want to make sure we don’t get the shafted in the process?

My wife makes a very custom product that has very little competition. The issue is we are about to sign a contract with 2 people interested in being partners. The positives is that we would receive a guaranteed fixed rate for an X amount of years and all expenses would be covered by the other two partners. Unfortunately neither one of us knows anything about contracts or selling product on this level. We will be licensing this product so there would be very minimal work on our end, but I want to make sure we arent going to get screwed. Are there a lawyers out there who will look over a contract as a consultation?

Asked on May 3, 2016 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Many lawyers will review contracts: if you don't know any, and can't get a referal from some other small businessperson you know (generally, personal referals are the best way to get attorneys), you can get a referral list from your state or city bar association. Typically, contract review and negotiation is billed on an hourly basis.
Contracts, though, are only as effective as your ability to "reach" the other person if they breach. If the other parties are in a different state or, worse, country, it may be difficult to effectively take action against them or, if you do sue or win, enforce a judgment against them. Also, LLCs and corporations, if they are little more than "shells" (no real assets; not a long track record or history; not much operations) can easily go out of business to avoid paying money, so if the other party to the contract is an LLC or corporation, get the owner(s) to personally guaranty any obligations, too.
Finally, trust your instincts: if at any time before signing, you get a bad feeling, walk away: I have had many cases where my clients said, "I knew I shouldn't have that...."


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