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How to spread the risk of a deal around

By Marc Diener

Opinions expressed by Entrepreneur contributors are their own.

The more people you can look to if your deal goes awry, thebetter off you'll be. Here's a survey of some standardtechniques. In all but the simplest cases, you'll need a lawyerto do it right.

  • Make them aparty. Getting others to sign the formal contract with youropponent can be the simplest way to rope another more responsibleparty into your deal. If possible, make everyone on the other sidejointly and severally liable. This lets you recovereverything you're owed from one individual without the hassleof suing the others.
  • The guaranty:Formal legal guaranties are better in theory than in practice.Historically, judges have been sympathetic to guarantors, and caselaw provides many technical defenses that let them off the hook.Thus, even if a lawyer can draft around these issues, there arelimits to how airtight this document will be.

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