{"id":2857,"date":"2023-05-15T09:43:00","date_gmt":"2023-05-15T09:43:00","guid":{"rendered":"https:\/\/alcleanscarpet.site\/Weatherby\/2023\/05\/15\/the-perils-of-business-deals-without-good-legal-advice\/"},"modified":"2023-06-06T08:56:13","modified_gmt":"2023-06-06T08:56:13","slug":"the-perils-of-business-deals-without-good-legal-advice","status":"publish","type":"post","link":"https:\/\/alcleanscarpet.site\/Weatherby\/the-perils-of-business-deals-without-good-legal-advice\/","title":{"rendered":"The Perils of Business Deals without Good Legal Advice"},"content":{"rendered":"<div id=\"pageContainer1\" class=\"page\" data-loaded=\"true\">\n<div id=\"textLayer1\" class=\"textLayer\">\n<div data-canvas-width=\"334.16748135\"><\/div>\n<div data-canvas-width=\"334.16748135\"><a href=\"http:\/\/weatherby-associates.com\/wp-content\/uploads\/2016\/10\/pexels-photo-70292.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-1726 size-medium\" src=\"https:\/\/alcleanscarpet.site\/Weatherby\/wp-content\/uploads\/2016\/10\/pexels-photo-70292.jpeg\" alt=\"The Perils of Business Deals without Good Legal Advice\" width=\"300\" height=\"200\" \/><\/a><\/div>\n<div data-canvas-width=\"334.16748135\"><\/div>\n<div data-canvas-width=\"334.16748135\">Lawyers can be expensive. But the value of good legal advice is not always appreciated. In the area of\u00a0business transactions legal costs should seem far less \u201ccostly\u201d when weighed against the potential\u00a0negative costs when business deals fall apart. The 2016 Mississippi Supreme Court case of Kilpatrick\u00a0v. White Hall on MS River, LLC is an example where the plaintiff chose to forego the services of an\u00a0attorney and in the end paid hefty price for that choice.\u00a0See\u00a0Dennis Kilpatrick v. White Hall on MS\u00a0Rivard, LLC, Supreme Court of Mississippi, No, 2014-CA-01485-SCT.<\/div>\n<div data-canvas-width=\"334.16748135\"><\/div>\n<div data-canvas-width=\"334.16748135\">In 2007, five fellow hunters entered into an informal \u201cgentleman\u2019s agreement\u201d to purchase land for\u00a0hunting. They orally agreed that each would contribute $500,000 towards the creation of an LLC to\u00a0buy the land. It was clear to each that the price would rise considerably if the closing did not take\u00a0place before December 31, 2007. A few weeks before the closing, Kilpatrick confessed to the others\u00a0that he could only put up $100,000, not the $500,000 he had promised. Since they were anxious to\u00a0close on the land purchase, the closing went ahead as scheduled. The partners apparently believed\u00a0Kilpatrick would eventually make the promised contribution. To make a long story short, the\u00a0promised contribution was never completed. Kilpatrick made some payments on the LLC\u2019s debt but\u00a0eventually he stopped those as well, and was advised that he would no longer continue to use the\u00a0property. Kilpatrick thereafter sued for recovery of the money he paid in to the LLC, but his claim was\u00a0denied by the Court.<\/div>\n<div data-canvas-width=\"619.7094745499996\"><\/div>\n<div data-canvas-width=\"619.7094745499996\">There were many things Kilpatrick and his fellow hunters did wrong. First, the real estate closing took\u00a0place on December 13 but Cvitanovich did not file a Certificate of Formation for the LLC until\u00a0December 17. That means the sellers failed to confirm they were actually doing business with a\u00a0validly registered business entity. Second, Cvitanovich himself drafted an Operating Agreement for\u00a0the LLC in January 2008. An Operating Agreement should be agreed upon and drafted before the\u00a0entity starts conducting business.<\/div>\n<div data-canvas-width=\"604.13086155\"><\/div>\n<div data-canvas-width=\"609.2724628499997\">Third, the document itself was unclear whether or not Kilpatrick was a Member. Although all five of\u00a0the hunters received a copy of the agreement only three of them signed it. The Agreement did not\u00a0even provide blank lines for the other two to sign. In one place the Agreement stated that a member<\/div>\n<div data-canvas-width=\"604.7973659999996\">was defined as an individual who had contributed $500,000. But there was a Schedule A that listed\u00a0Kilpatrick as a member. Yet the Schedule described his ownership as \u201c0 shares.\u201d Furthermore, above\u00a0the signatures to the document was a clarification that \u201c<\/div>\n<div data-canvas-width=\"274.409181\">no one is named a member until the financial\u00a0obligation of $500,000 is met, and that no rights and\/or privileges to Whitehall property will be\u00a0permitted to anyone other than a member.\u201d<\/div>\n<div data-canvas-width=\"257.54882910000003\"><\/div>\n<div data-canvas-width=\"596.4477559499999\">The trial court and the appeals court each held that Kilpatrick never became a member of the LLC.\u00a0Therefore he did not get back his $100,000 contribution or the $86,500 he paid towards the LLC\u2019s\u00a0debt. Kilpatrick should have retained an attorney before he paid any money. An attorney would have\u00a0reviewed the Operating Agreement presented by Cvitanovich and could have helped Kilpatrick\u00a0understand its terms. Since he received no legal advice, Kilpatrick did not understand he would have\u00a0no membership rights until he contributed the full $500,000. And furthermore, even when he became a member, the Operating Agreement provided that no members would have any rights to withdraw any contributions.<\/div>\n<div data-canvas-width=\"596.4477559499999\"><\/div>\n<\/div>\n<\/div>\n<div id=\"pageContainer2\" class=\"page\" data-loaded=\"true\">\n<div id=\"textLayer2\" class=\"textLayer\">\n<div data-canvas-width=\"608.5913102999999\">Beyond just interpreting the Operating Agreement, a lawyer could have advocated for better terms.\u00a0For example it seems unreasonable for Kilpatrick to have paid $186,250 yet have no membership\u00a0rights whatsoever in return. And certainly a lawyer would have insisted that Kilpatrick sign the\u00a0Operating Agreement before allowing him to pay any money. In the end we don\u2019t know exactly how\u00a0much it would have cost Kilpatrick if he had hired a lawyer. But it clearly would have been far less\u00a0than the $186,500 he ended up losing!<\/div>\n<div data-canvas-width=\"591.0351583499998\">If you have any questions about the issues presented above or care to discuss any other planning\u00a0issues, please call us at 860-769-6938, visit our website at\u00a0<a href=\"http:\/\/www.weatherby-associates.com\/practice-areas\/planning-family\/\">http:\/\/www.weatherby-associates.com\/practice-areas\/planning-family\/<\/a><\/div>\n<div data-canvas-width=\"86.17675815000001\">or email us at <a href=\"mailto:info@weatherby-associates.com\">info@weatherby-associates.com<\/a><\/p>\n<div><\/div>\n<\/div>\n<\/div>\n<\/div>\n<div data-canvas-width=\"86.17675815000001\">\n<h2 data-canvas-width=\"334.16748135\">The Perils of Business Deals without Good Legal Advice<\/h2>\n<h1>Business Attorneys CT<\/h1>\n<\/div>\n<p>https:\/\/weatherby-associates.com\/businessadvicebusinessattorneys<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lawyers can be expensive. But the value of good legal advice is not always appreciated. In the area of\u00a0business transactions legal costs should seem far less \u201ccostly\u201d when weighed against [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2857","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Perils of Business Deals without Good Legal Advice<\/title>\n<meta name=\"description\" content=\"Business Attorneys CT, The Perils of Business Deals without Good Legal Advice, Weatherby Associates provides legal business advice. 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