Why do I need to document this?
I am often asked by clients, especially family businesses, ‘Why do I need to document this?’
Whether it’s a loan, sale or purchase or rules for a business, often clients don’t want to spend the money to document what may often be between related parties or entities. However, setting out in writing the rights and obligations of parties is a great way to avoid disputes in the future. Think about, for example, when money is lent and clearly intended to be a loan. Without documentation, how do you prove that it was, in fact, a loan other than by one person’s word against another? Many disputes arise from undocumented agreements or arrangements that were self-documented, but the terms of which created ambiguity. The old adage, ‘a stitch in time saves nine,’ is certainly true when answering this question because spending money fighting a dispute is often more costly than properly documenting the transaction in the first place.
By New South Wales based Family Business Accredited Advisor
Rebecca Hegarty
Head of Corporate & Commercial
