As the age-old adage goes, “money and friendship don`t mix.” And while it`s generally not advisable to mix personal relationships with financial agreements, there may still be times when an investment agreement between friends may seem like a viable option.
An investment agreement between friends is a legally binding agreement that defines the terms and conditions of an investment made between two parties who have a personal relationship with each other. This agreement can be made for various reasons, such as starting a business together, investing in a property, or financing a new project. Here are some key aspects to consider when drafting an investment agreement between friends:
1. Define the Investment Terms
The first step is to define the investment terms. This includes the amount of money being invested, the purpose of the investment, and the expected return on investment (ROI). It`s important to be clear and concise when defining these terms, as they will be the backbone of the agreement.
2. Outline the Responsibilities and Roles
Once the investment terms have been agreed upon, it`s time to define the roles and responsibilities of each party involved. This includes outlining who will be responsible for managing the investment, who will have decision-making rights, and who will be responsible for keeping track of financial records.
3. Establish the Timeline
Another crucial aspect to consider is the timeline of the investment. This includes the duration of the investment, the expected timeframe for ROI, and the process for exiting the investment. It`s important to establish a clear roadmap to ensure both parties are on the same page and aware of the investment timeline.
4. Include Legal Clauses
An investment agreement between friends is a legal document and should include legal clauses to protect both parties. These clauses can include confidentiality agreements, dispute resolution procedures, and a termination clause in case of a breach.
In conclusion, while an investment agreement between friends can seem like an attractive option, it`s important to approach it with caution. A clear and concise agreement can help protect both parties and avoid potential conflicts. It`s important to seek professional legal advice before drafting an investment agreement between friends to ensure all necessary legal clauses are included.