Many lawyers draft contracts that are too long, too complex, and just badly written. Bad agreements are hard to eradicate, because everybody copies everybody else without thinking twice about it.

Agreements should be easy to read and should make sense from a legal and logical perspective.

Fortunately, Ken Adams and his blog have come to the rescue. In one of his recent posts, Ken discusses the common use of "for the avoidance of doubt."

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See Part 1 here; Part 2 here; Part 3 here; Part 4 here; Part 5 here;

This is the first in a series of five posts working through the process of buying a small business in New York.

This series will focus on the legal aspects of such a transaction and an attorney’s contribution to a successful business purchase.

Let’s start with an overview of the usual sequence of events when buying a business. Obviously, the first step is to find a business worth buying.

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If you are determined to pay no more than $99 dollars for your business incorporation, why not do it yourself?

Here is how:

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Great – you have found people who share your vision to own and grow a business. But don’t forget that going into business with other people requires you to think ahead and be clear about the relationship. This is your livelihood and future. Do not think for a minute that conflicts can be resolved as you go along. Even the best of friends can end up in serious conflict over issues that might seem minor.

While you may be tempted to save the money that an attorney might charge to document your agreement, think about the thousands of dollars you may have to pay to litigate a conflict or the money you might lose because such a conflict keeps you from operating a profitable business.

Regardless of the legal entity you may choose for your business, think about every issue that might be relevant for your particular situation, and have your attorney draft the appropriate legal papers. Naturally, you cannot foresee every possible disagreement that might arise in the future. Beware of business partners who need to agree on every minute detail of the business-to-be. (That could be a hint that going into business with that particular person might not work out for you in the long term.)

Following are some of the basic issues you need to agree on with your fellow business partners.

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If you thought you were immune to liability as a shareholder of a New York corporation, know this:  In New York, the ten largest shareholders, as determined by their shareholding, of every  closely held corporation are personally liable for all  salaries due to any of its employees for services performed by them for the corporation.  See Sec 630 NY Business Corporation Law.   

If you need help with the topic of Liability of New York Shareholders for wages due to employees, call a licensed small business attorney in your area.

Once you know there will be a written agreement, someone has to draft it.  Should it be your lawyer or the other party’s lawyer?

Some say make your lawyer insist on preparing the first draft.  I tend to agree with that.  It gives you the opportunity to set the stage for later negotiations and control the language of the agreement.  Whether he or she will suceed with that request depends on which of the parties has more bargaining power and whether the other side sees an advantage in preparing the first draft.  If you are the party for whom most of the protections of the agreement are designed, for example a buyer in a purchase agreement or a lender in a loan agreement, you could argue that this fact alone should let your lawyer be the first drafter.

I think in many cases it is shortsighted to be afraid of the attorney’s fees for the first draft and subsequent revisions.  In my experience, marking up a bad draft and checking on revisions often takes longer than drafting the whole thing in the first place.  In particular, because your attorney should have pretty good samples to start with and thereby minimize the time to produce a good first draft.

Of course, sometimes it is just a matter of who was faster to seize the opportunity.  A seller may present you with a draft very early in the negotiations and thereby make it harder to insist on a complete redraft.