What should you record?
You decide how much information the vof contract has to contain. But keep in mind that the agreements you record should help to prevent and settle disputes. Think about a liability conflict, or financial risks. Asset contribution and profit division are also important topics. It it useful to put the following points in your vof contract:
- Business name: what do you want to call your vof?
- Description of the purpose of the vof: why are you setting up this vof, and what are the partners' activities? It is important to record this carefully, in case one of the partners decides to start doing something completely different in the name of the vof. If you record the vof's purpose and activities, a partner will be personally liable if they start undertaking different activities.
- Duration: is the collaboration set up for a definite or an indefinite period of time?
- Contributions: who contributes what to the vof at its start?
- Authorisation of the partners: which authorisations do you and your partners have in the vof? Can they all act independently on behalf of the vof, or do all partners need to sign off on each decision?
- Reward of labour and profit division: what do you and your partners agree on when it comes to rewarding labour or profit division? A partner is never an employee, but you may agree to reward yourselves an advance on the profit division at the end of the year.
- Ending: what happens if one of the partners decides to leave the vof? Lay down agreements on a notice period or compensation. Also think about agreements on what happens if the partnership ends, for instance in case of bankruptcy.
- Illness and occupational disability: what happens if a partner falls ill and can no longer work for the vof? Consider a mandatory occupational disability insurance, and for how long you continue to pay a partner who is ill.
- Continue when the vof ends: if a partner leaves the vof or passes away, by law the vof ends. Do you and other partners wish to continue the business? Record takeover or accretion clauses in the vof contract.
- Determination of value: if a partner stops, they either receive back their input, or they have to make an extra payment. It depends on the value of the vof. Record in the contract how this value is determined, and who determines it.
- Solving disputes: a conflict among partners is always possible. Record in the contract how you want to solve disputes, for example by mediation.
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