How to spread the risk of a deal around
The more people you can look to if your deal goes awry, the better off you'll be. Here's a survey of some standard techniques. In all but the simplest cases, you'll need a lawyer to do it right.
- Make them a party. Getting others to sign the formal contract with your opponent can be the simplest way to rope another more responsible party into your deal. If possible, make everyone on the other side jointly and severally liable. This lets you recover everything you're owed from one individual without the hassle of suing the others.
- The guaranty: Formal legal guaranties are better in theory than in practice. Historically, judges have been sympathetic to guarantors, and case law provides many technical defenses that let them off the hook. Thus, even if a lawyer can draft around these issues, there are limits to how airtight this document will be.
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