What should I consider before entering into a business contract with a new partner in Illinois?

Before entering into a business contract with a new partner in Illinois, there are several factors that you should consider.

1. Type of Partnership: You should consider what type of business partnership you wish to form. A limited partnership, general partnership, limited liability partnership, or limited liability company will have different legal requirements and implications. Each type of partnership may have different tax implications, management structure, and liability implications. You should therefore carefully consider the different options available and seek advice from a licensed attorney before selecting the best option.
2. Partner’s Reputation: You should thoroughly investigate your potential partner’s reputation and background. This includes researching their business history, financial stability, credit score, litigation history, and criminal records.
3. Financial Considerations: You should review the financial records of the potential partner to determine their financial stability and the risk of future losses. A financial expert and licensed attorney should review the financial records to ensure the accuracy of the information.
4. Duration and Scope of the Partnership: It is important to have a clear understanding of the duration and scope of the partnership. This includes the expected length of the partnership, the business objectives, and the responsibilities of each partner. You should have a clear, well-drafted partnership agreement that outlines these terms.
5. Dispute Resolution: You should consider how disputes between the partners will be resolved in the event of a disagreement or breach of contract. This should be included in the partnership agreement, and the agreement should establish a dispute resolution procedure that is fair, cost-effective, and efficient.
6. Liability: You should review the liability implications of the partnership structure you choose. Your potential partner’s level of contribution and responsibility should also be clarified in the partnership agreement. This would prevent exposure to any undue liability.
7. Termination Clauses: The partnership agreement should include termination clauses that set out the circumstances under which the partnership can be terminated, and how assets and liabilities will be distributed upon termination.

Conclusion: Entering into a business contract with a new partner can be complex, and it is important to consider all relevant factors to make informed decisions. Consultation with a licensed attorney can also help to clarify any legal ambiguities and avoid potential future disputes.