Ugh! No one wants to think about it, but you should. If things get ugly between partners, how are disputes handled? The partnership agreement should define the resolution process. Should mediation be the first step? Do you need arbitration to resolve disputes? Keep in mind that when a dispute goes to court, legal action will be part of the public record. If you define how you deal with disputes, the riddles of navigation dissent. During the Industrial Revolution, English courts became increasingly entangled in the notion of « contractual freedom. » This was partly a sign of progress, since the remnants of feudal and commercial restrictions for workers and businesses were removed, a move of people (at least theoretically) from « status to contract ».  On the other hand, a preference for laissez-faire ideas was the unequal bargaining power in several contracts, particularly for employment, consumer goods and services and leases. At the centre of the General Treaty Act, captured in rhymes such as Robert Browning`s rat hunter of Hameln in 1842, was the legendary idea that if people had promised something, « keep our promise. »  But then the law claimed to cover any form of agreement, as if everyone had the same free will to promise what he wanted. Although many of the most influential Liberal thinkers, particularly John Stuart Mill, believed with several exceptions to the rule that letting him do so was the best policy, the courts were wary of interfering in agreements, regardless of party. In Printing and Numerical Registering Co v Sampson, Sir George Jessel MR declared a « public policy » that « free and voluntary contracts are sacred and enforced by the courts. »  In the same year, the 1875 Justice Act merged the registry courts and the common law, always favouring just principles (such as Estoppel, inappropriate influence, resignation for misrepresentation and loyalty or disclosure obligations in certain transactions).  There are certain contracts that must be submitted in writing, including the sale of real estate or a lease for more than 12 months.
If a company or LLC has a number of directors or employees, it may be difficult for an outside agent to determine whether the representative, as a representative, is in fact authorized to enter into an agreement on behalf of the company. If the representative is not authorized, it may still be possible to hire him on the basis of an « obvious agency » theory, but this may require significant litigation to determine. It is preferable to insist that the representative demonstrate his authority, either as an owner or an officer, with the authority of the Board of Directors. I cannot stress enough the importance of this! Trust me, you and your partners will not agree on everything. They need to define how day-to-day management and long-term decisions are made. Who`s going to have the last word? Determine what types of decisions require a unanimous vote by partners and which decisions can be made by a single partner. By creating a decision structure that everyone understands and that everyone has approved, you will have the basis for a more frictionless business. Corrective action is often agreed upon in a contract, so that when a party does not comply with the contract, it dictates what happens.
A simple, common and automatic remedy is to have taken a deposit and to keep it in case of non-compliance. However, courts often treat any surety that exceeds 10 per cent of the contract price as excessive. A specific justification is needed before a larger amount can be retained in the form of a surety.  The courts see a high bond, even expressed in plain language, as a partial payment of the contract which, if not executed, must be reinstated to avoid unjust enrichment.