May 15, 2024 • 34 mins
Unlock the secrets to securing your business's financial future as legal expert Mickey Fox joins us to navigate the essential world of contracts. Discover how meticulous agreements lay the groundwork for trust and fruitful financial partnerships in our latest episode. Mickey brings his wealth of knowledge in business and real estate law, detailing the devastating impact of poorly constructed contracts on the lending process. We tackle the importance of precise language and exhaustive agreements, ensuring you're armed with the key elements for successful funding deals. From pinpointing the parties involved to defining the loan terms and collateral, we've got you covered on every critical aspect that fortifies the backbone of your business's finance strategies.
Dive deep into the nuances of partnership and operating agreements, equipment contracts, and the complexities of debt consolidation with a legal lens that shines a spotlight on protecting your interests. With Mickey's guidance, we dissect the vital components of solid business contracts, highlighting the strategic role of legal counsel in steering clear of ownership stake pitfalls that can jeopardize funding. Our conversation traverses the landscape of stipulating governing laws, jurisdiction, and the integration clause in contracts, equipping you with the knowledge to prevent legal dilemmas and embrace the strategic advantage of professionally vetted legal agreements. Tune in to gain invaluable insights that promise not only to educate but also to empower you in your business endeavors.
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If you need assistance in obtaining funding, email us at podcast@tdjequityfundinginsiders.net. Tell what the scope of funding is needed and the amount. A broker will contact you to discuss your funding needs. And remember, at TDJ Equity Funding, we do not force your funding needs into a lender's box but find a lender's box that fits you!
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Episode Transcript
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Speaker 1 (00:13):
Ready to get the inside scoop on equity funding?
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(00:35):
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Speaker 3 (00:47):
Welcome funding insiders to another exciting
episode of the TDJ EquityFunding Insiders podcast, your
go-to source for insights intothe world of financing, lending
and everything in between.
I'm your host, jacquelineJackson, and joining me today is
Mickey Fox as our co-host fortoday's episode of our attorney
(01:09):
hour.
Mickey is a local attorney witha great reputation,
specializing in business,commercial and real estate
matters.
His extensive experience alsoincludes corporate and business
consulting, as well as businessconstruction and real estate
excuse me, real estatelitigations at both the state
(01:31):
and federal levels.
So, as loan brokers, we haveseen where the clarity and
contractual agreement is veryimportant.
So with this episode, what wewant to do is to get a clear and
comprehensive contracts notonly outlined in the business
terms, but also establish aresponsibility and obligations
(01:52):
to each party.
This transparency builds afoundation of trust and falls on
a positive lending relationship.
So this episode, this episodewe're doing today, is actually
going to talk on that, withMickey being here as a legal
reference for us to discuss someof these questions.
So let's thank Mickey forcoming to our show today.
(02:14):
Welcome, mickey, mickey, andthank you.
Speaker 2 (02:17):
Good afternoon.
Speaker 3 (02:18):
Okay, great, all right, so let's get this started
.
If you don't mind, let's goahead and get into the questions
.
We've had you here before, sonow we have you back on the
contractual side as far as howit works with lending.
So we're going to start offwith our questions today, which
is basically.
The first one is how do welldrafted business contracts
(02:39):
contribute to the success of alending process, and what role
do they play in building trustbetween parties?
Speaker 2 (02:48):
Well, first of all, thank you very much for having
me back.
It's a pleasure to be here.
Contracts are really more thananything else.
There are evidence of thisdiscussion that you've had with
this other party about what yourdeal is.
If a contract is properlydrafted, then you know what
(03:08):
every term is, everything thatyou've agreed to, and it's set
out and defined so that there'sno disagreement later when you
come to the funding table, as towhat one piece means or what
one party assumes.
In order to really get a good,smooth funding process going,
you need to have that agreementdrafted out so that not just you
(03:29):
and your business partner orwhoever you're doing the
contract with, understands it,but also so that people like
Jackie understand what's goingon, what they're funding, and
then what the extent, the depthand breadth of that funding is,
and maybe even what collateralis there.
Speaker 3 (03:47):
Okay, so basically what you're saying and what we
just to add to it from thebroker side.
You're correct on theunderstanding of the parties,
because what happens is when youhave an agreement that you
brought to us saying this is mypartner, so we're all together
part of the lending, they wantto see if that agreement is
correct.
Is it set up like your saying?
(04:10):
It is Because they're going togo about what's in writing, not
about what people say and whatwe run into that makes the
lending process longer with thisis that the contracts that they
bring in, the language is notclear, and when the language is
not clear, that stops.
So I mean so, in your opinion,working with it being and give
some examples I know you and Ihave talked about this before of
(04:32):
people, how that that actuallyaffect them and what they were
actually doing with thecontracts not being what it
needs.
So definitely give us anexample to talk to us about that
.
Speaker 2 (04:41):
Well, let's start with just the basics of what a
contract is right.
It is a promise in exchange fora promise, and some of the most
important parts of that areclear identification and who the
parties to the contract are.
Do you adequately name yourselfor your business entity?
Do you provide ampleidentification as to who's
actually you know, for instance,taking out the loan?
(05:03):
You don't want to personally betaking it alone if it's for
your business entity, becausethen you're obliging yourself,
your personal assets, tosecuring that loan.
Maybe the second thing you wantto do is talk about what the
loan, what the loan covers, whatthe scope of it is.
Is it a maybe just anoperational loan to give you a
(05:24):
little free cash?
Is it a loan that's intended topurchase a piece of property or
secure a lease or somethinglike that?
You need to add that clearlydefined and more specifically
when it comes to collateralizingthe loan.
That is what guarantees theloan.
You want to make sure that theitems listed in that collateral
(05:46):
document are the items youintend to collateralize.
The other thing and I see thisa lot more than you would think,
and it doesn't happen so muchwith funding agreements, but
just agreements in general,contracts in general is that I
might have a contract where onlyone party signed it and I'm not
sure if the other party hasactually executed that.
Speaker 3 (06:09):
Right.
Speaker 2 (06:10):
Or I might have two different documents.
They're two different draftsmaybe of the same document where
both sides have signed, butthey've signed different drafts
and then it's up to us to try tofigure out what the party's
intended.
Really.
Those are the big things.
When it comes to fundingmatters like taking a loan out
(06:32):
on something, you want to beclear on the term of the loan,
the amount of the loan, how muchyour payments will be when the
payment due dates, are the verysimple things that kind of go
into making that loan.
You want to be careful ofthings like what puts you in
default on that loan.
It's amazing what can happen.
(06:54):
A lot of lenders there was aperiod of time where a lot of
lenders were going to think of auniversal default, which means
if you defaulted on any loanwith anybody whether it be your
credit card, your landlord, youruncle that could create default
.
Speaker 3 (07:11):
Student loans.
They have CAVAR.
It's the one we go to forstudent loans.
They'll look to see if youdefaulted on student loans.
Speaker 2 (07:18):
Do not be in default on your student loans if you're
trying to get credit foranything.
Speaker 3 (07:22):
Oh man, yes, that will follow you.
Speaker 2 (07:25):
So making sure that you have those elements written
in, and written in clearly,that's super important and it's
not something you need to worryabout so much when you're going
through somebody like Jackie,because that's part of their
business is making sure thatthese agreements have these
necessary terms.
But I mean, if you're justtrying to get along from, like I
(07:49):
said, your uncle Harold, youwant to make sure you have that.
And if you're lending money,you really want to be careful of
things like interest rates.
You don't want to run a foul ofusury.
You want to make sure that youhave payment due dates, things
like acceleration clauses.
There is a mess of things toconsider when we're dealing with
(08:11):
documents and evidence funding.
Speaker 3 (08:15):
So I had like just to go on what you said.
One of my mentors had made agood comment.
When it come to contracts, ifyou know, you have a tendency to
borrow even if you allow yourfamily to borrow money, like you
just mentioned, then a certainthing's usury and all that stuff
.
So when he said, come, get onelink, pay for it one time
legally to set you a contract up, then you can use that with
(08:37):
anybody else that's goingforward.
So if you're in any type ofbusiness, to actually, I believe
, to have an attorney and that'swhy we wanted you on this on
our show is that so we can showthe advantage that an attorney
is not just when things are not,you know it's criminal.
That's not the only time youneed to think about it.
When it comes to business,they're more your preparers.
They're going to be the onesyou're going to have in the
(08:58):
beginning before you need themin business, am I?
Speaker 2 (09:01):
correct.
I will tell you there's anongoing relationship that you
really need to have with yourattorney as well Because, for
instance, I can create a loandocument that maybe eight, nine
times out of 10 will work foryou in a given situation.
There are different things thatyou can that can create some
real big issues for you ifyou're not careful.
And this is talking about usury.
It's easy to run a fallow ausury law by putting too much of
(09:26):
a monthly interest rate in it.
If you, if you calculated as aPY, is that APR right?
If you collect a little toomuch and you don't refund it to
the customer, no, properlycredited over those can create
huge issues for you, Right, andespecially with family members.
(09:47):
You know, if I had a dollar forevery time somebody came to me
with a family member they hadloaned money to, I would not
have to practice law right now.
It just seems you know familyand friends.
It's always family and friendsor maybe business acquaintances,
somebody that you're veryfamiliar with.
It's better to have that inwriting because, again, when
(10:09):
things are good and when peopleare paying you, there's not a
problem.
When people aren't paying you,it's a problem, and in fact in
Texas.
It's possible that if you don'thave that loan in writing, you
may not be able to collect on itat all.
Speaker 3 (10:26):
Wow, wow, wow.
And see, that's what I'mtalking about, that important
stuff that we need to know,because a lot of us do business
on what we've heard or what wethought or what we found online.
You know we pretty much will doit that way, which is not best
when it comes to contractual,like I said, contracts that need
to be basically correct andlegal, and I think we start
(10:50):
businesses off our helps and wefeel like, oh, I don't need an
attorney for this, I don't needan attorney for that.
But the thing is you do If it'snothing, but you have them to
look at your contracts and getit set up for you.
One time you have a contractthat you continue to use, it's
worth investing in that in thebeginning of your business.
Then, waiting to you go tocourt and find out the contract
(11:10):
you got, it doesn't have any,it's not as weight in water.
You know what I'm saying.
So I mean, I know, you knowwhat I'm saying.
Speaker 2 (11:19):
Well and I know I said this last time I was on
your show Lawyers are good aboutthe it depends kind of answer.
And what that means is that ina given contract, if you change
a few facts here and there, itcan greatly affect the outcome
of the contract.
And if you change a few things,some of the provisions might
(11:44):
actually be illegal or they maynot work the way you need them
to work.
You know.
You know the overall contractmight, so it's good to sit down
with somebody and talk itthrough and even if you have
this document that you've used,you know, 20 times in the past
and it's always worked,understand that the law changes.
Speaker 3 (12:04):
That's true, it's true.
Speaker 2 (12:06):
And I'm going to tell people this.
I think it's pretty apparent,but the legislature is full of
lawyers who draft laws that areinterpreted by judges who are
lawyers, Right.
Speaker 3 (12:19):
Right.
Speaker 2 (12:20):
We have clients that are lawyers, right, you know, or
who have, or lawyers who haveclients.
There's a lot of lawyers in theprocess and anytime there's a
bunch of lawyers in the process,you know it's going to cost you
much.
Speaker 3 (12:33):
Right.
So he, basically he's saying soit's going to cost us either
way.
Okay, you know.
Yeah, it does.
Speaker 2 (12:43):
But look, an hour of my time, it's not that much.
It's not that much to pay for alawyer, right?
And just just a short amount oftime for the lawyers to sit
down.
Look at your documents.
Give you a good idea aboutwhat's what's workable, what's
not workable, what meaningrevision, right, what changes to
the law might have happened?
Speaker 3 (13:03):
Exactly.
Speaker 2 (13:05):
And also last time I had mentioned that the
department of labor changed itsits way of classifying 1099.
So, contractors or contractors,that changes everything.
You know.
Once that goes into effect, theway we do business as as
contractors, when we are people,is really going to change a lot
(13:27):
.
And if so, if your yourcontract agreement with those
1099 subcontractors worked thismonth, it won't work after
launch.
Right, things will change Right.
Speaker 3 (13:40):
So it's just great to .
If you're in business this iswhat we're talking about You're
in business and you want to growthis business, then these are
some things you have to look atcontracts being really legal
contracts, especially if you'relooking at funding.
And I do want to take time tomention the type of contracts we
see, or the lender need to see,before we actually go to
(14:01):
closing or even pre approval,and things are like that, and H
or approval is.
Some of the following are and Iwant you all to take notes of
this, listener your office lease.
Office lease needs to be signedby landlord and you, okay,
that's an office lease.
Okay, they need that.
They would like to have copiesof the original office lease.
They have asked for that attimes.
(14:23):
All right.
So then you have yourpartnership agreement, where any
type of agreement that you allhave, where you're going to
bring your partner in and, likeMickey talked about that, family
and like you said, we do familyfor his bar and money and
everything, but you, we alsobring family in and in business
with us, like you said, and it'sa good time when they come, but
it ain't a good time when theyleave.
(14:45):
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Speaker 3 (16:13):
So that's another thing we have to look at, which
is the partnership agreement andoperating agreement.
Again, these things like if youcan say they have to, you need
to sign them.
Your operating agreement ittells us legally how, who's
going to be running a day-to-dayoperation, what's going on,
who's all involved in thecompany.
It also let us know theownership, because anybody that
(16:34):
owns 20% or more in a company,any company that documents have
to be brought to the long table.
That's what people don'tunderstand.
If you own sometimes it's lessthan that they'll take 20% or
less, and sometimes it may be 10or 15, but either way go
Whatever the lender says then ifyou are part of that company,
you need to bring all thatinformation to that particular
(16:55):
company.
If you have someone and you work, like on a credit, people come
to us with the credit.
Well, if the majority owner hasthe lower credit, then that's
going to weigh the biggestweight on whose ownership and
what you all get.
That's something down the roadis a whole different show, but
they need to be aware of that.
The other kind of contract isan equipment contract purchases
and lease.
Some equipment does not allowyou to refinance or does allow
(17:20):
you to pay them off early, stufflike that.
You need an attorney to look atthese contracts that you have,
because then when you bring themto us and you want to
consolidate your debt, well,guess what, that $98,000 machine
that you got, we can't put thatunder the debt.
You got to pay that separateand now it's part of your debt.
Speaker 2 (17:36):
You want to have the attorney look at these things
before you enter into thosecontracts.
Speaker 3 (17:40):
Yeah, you're right Before you enter right.
Right, right, definitely.
So, thank you.
So definitely.
We want you and that's what I'msaying.
I mentioned these so you allcan have them to look at it, and
then any other type of debtcontracts you may have,
especially if you want us, asthe lenders, to actually combine
that.
If we're going to combine it,then we have to actually one see
that the contract, what youhave, is a legitimate contract
(18:03):
that you have and that issomething that can be refinanced
.
They got to check that out andsee if that can happen as well,
because we have found out somecontracts on some debts do not
allow you to do that.
And that was a biggest thing.
And, like you said, come to youbefore you get into those type
of contracts.
So let's talk about therelationship of having an
attorney.
So, from a legal perspective,what would you think for is the
(18:26):
language and the components thatshould be in a business
contract to protect them?
Name a couple of you.
You think they should justgenerally have in there for sure
.
Speaker 2 (18:35):
Well, ok.
So with every contract, like Isaid, you need to have clear
identification of the parties,the term of the contract, what
the contract's really about.
Is it about a loan?
Is it about a job you're doing?
You need to have the wholescope of that set out payment
terms, dates of completion,things like that and you need to
(19:00):
make sure that you have goodsignatures, people who are
authorized parties.
That's an important thing.
You have a signature bysomebody, maybe by a member, and
that member is not authorizedby the company or the clerk that
was at the front desk at thetime.
Right, those are the basicthings.
(19:20):
But there are other things inthese contracts that, when you
see them, I really want peopleto understand what they are.
There's a clause in almost everycontract and I'd like to see it
in all contracts.
It's called a corporationclause, but basically what it
(19:41):
says is look, never mind allthose talks we had before we
came to contract, never mind allthe discussions we had, the
emails we had, the documents wemight have talked about,
whatever agreements we mighthave had, this contract is the
only agreement.
It is the full and completeunderstanding of our agreement.
(20:02):
We're not going to rely on someemail chain that happened a
month ago.
We're going to rely just onthis contract.
So if you see that integrationclause, what it's saying is
we're not going to be looking atanything else other than this
one document.
Right, woeyer's called it anintegration clause and that's
kind of counterintuitive.
(20:23):
Some of the other clauses youwant to look for are things that
set forth the law of thecontract, especially if you're
kind of close to the state lineor if you're doing business with
somebody in another state.
You want to make sure that youhave Texas law.
If you can't apply that way,you kind of have a better
(20:46):
understanding of what you canexpect.
If you have Connecticut lawapplying, for instance, then you
have to rely on that law andsome of the expectations that
you have here in Texas won'tapply there.
Venue jurisdiction jurisdictionand venue are actually two
different things.
So when you see jurisdiction itdoesn't really mean anything
(21:10):
other than the court has theright to say what you're looking
for is a venue provision thatsays all the lawsuits, all
arbitration, anything you'rerising out of or coming through
this contract, they're going tobe done in a certain place.
And if you're in Cullen County,for instance, you don't want to
have a venue that's down inHouston.
Or if you're in Flower Mound,you don't want to come all the
(21:35):
way over to Cullen County.
That makes it a little easierfor you and, more importantly,
if you have an attorney that youhave an ongoing relationship
with, you don't want thatattorney to charge you for
traveling down to Houston forevery year.
So that's something that's kindof important.
You're looking for breachprovisions.
(21:56):
What events in this contract,what events will occur that will
cause you to be in breach orthe other party to be in breach
of the contract, and then whatpenalties result from that?
Is this a breach that can befixed?
Is there a notice requirementthat says, ok, if somebody
breaches it, I need to sendnotice and then you have 30 days
(22:19):
to fix it, or something likethat you want to.
Big thing is you want to checkfor indemnification requirements
, whole armless requirements.
Are you agreeing that you'regoing to pay the other guys
costs and fees and everything ifthere's a breach of the
agreement?
That's not just attorney's fees, that can be loss of business.
(22:40):
That can be you.
If they get sued by somebodyelse, you know, and they lose
something, you may be liable forthat as well.
And that's why you make it abig deal that you always want to
have a good insurance policy,good business insurance policy,
to cover those things you wantto look for.
(23:01):
You know attorneys fees Clausesto see who's gonna pay whose
attorneys fit If somebody wins alawsuit or some sort of
litigation or something orarbitration about this.
On these kind of provisions.
I like to see it with bothsides.
You know, if one side gets anattorney's fees provision, the
(23:22):
other side should get it to.
I think that's fair right.
But generally the the biggestpart is you got to remember
these agreements are not whathappens generally when things
are going well, right, it's whathappens when something goes
wrong.
For instance, what if you can'tget funding?
(23:42):
You've got an agreement topurchase something and you can't
get funding.
You know the standard contractshere in Texas, the ones put out
by the Texas Real EstateCommission the public called
promulgated contracts.
They usually have a A, anexample, and you said it.
(24:03):
But it's an extra document.
It's that deals with fundingand what happens if you don't.
If you can't get funding,that'll let you out of the
contract.
So you don't know any money.
That's a big one, you know.
You want to make sure that youknow what's gonna happen if you
don't get funding right.
Speaker 3 (24:19):
So it's more of a clause, protection clause, and
you write that's well isimportant to have real estate
agents as well, because a lot ofpeople like I can do stuff and
you can don't get me wrong, youcan but one thing about having a
real estate agent when I talkto my realtors that they know
the legal Legalities of realestate investment.
Speaker 2 (24:37):
So no, you have to be careful with that.
A real estate agent cannotadvise.
Let me finish.
That's what I'm saying.
Speaker 3 (24:44):
No, no, there's not one of this one.
I'm saying having a real estateagent, when it comes to that
real estate contract, it willhave everything in it to protect
you as a buyer or seller.
That's what I was saying.
That's why I say you want areal estate agent, because at
least that agent knows how it'ssupposed to go.
Speaker 2 (25:02):
And what's your right ?
Long as they're using thepromagated contracts from the
Texas real estate commission,we're in spot right, that's what
I was talking to.
Speaker 3 (25:11):
One to residential one is from the state is what I
was talking to.
One.
You know the the form, sothat's what I was looking at.
But I'm just saying, even withthat, the contract covers you is
safe, instead of you drawing upyour own contract and trying to
do Things your way.
That's what I'm saying.
Contracts across the board aregood If you're going to utilize
them and let them do what theyneed to do is what I'm saying.
Speaker 2 (25:33):
The standard contracts can be good.
There's a section in there forspecial conditions and what I
see sometimes is people gettinga little out over their skis and
writing provisions into thespecial conditions.
That Really amounts to thepractice of law and they create
problems and they don't mean toand I understand that as long as
their factual statements youknow about, you know what can
(25:56):
base with a house in thebarbecue, you know that kind of
stuff.
Right, that's fun.
But when they start talkingabout you know this, this
contract is subject to some ofthe contract or you know.
I've seen other provisions inthere.
They were much worse.
It gets a little Difficult andif there's anything like that
(26:19):
that you need in a contract,please go see an attorney.
Just, you know, spend the $255whatever it takes to go sit with
the attorney to make sure thatyou have it properly trapped it,
because I've had more than onecase of litigation when a real
estate agent got a little overtheir skis with things and it
just created a mess, completelyunintentional.
(26:42):
You know everybody means to dowell, but the increase problems
later right, right and of coursethat's that.
Speaker 3 (26:50):
That attorney, this in you when you given
suggestions, which is right.
They do need to come see anattorney on that.
But definitely understand mything is Contracts with people
looking at it, compared to youdoing.
I guess that's more, mickey,what we see a lot when not a lot
, but when people come withcontracts they're not come with
contracts, it was done byattorney.
You know, I'm saying they'recoming with it and that's what
(27:12):
I'm talking to, not the onesthat come correctly and, like
you said, definitely guys, eventhough we're not a real estate
Station podcast, but definitely,like I said, if you're in real
estate and you need to go lookat get some attorney, definitely
see an attorney.
I believe you're definitelycorrect on that.
So we want to do that.
I think he is basically justtalking about the contracts that
do come our way that we runinto that a lot of people have
(27:33):
no clue, like you said, thatthey should have had an attorney
involved and we'll hopefullythey can see from this.
We're not trying to get you tospend all.
We want you to spend money andthen you just deal with it's not
that.
It will slow you down andgetting money and it also will
cost you down the line you knowfor money if you don't have your
contracts correct.
Am I?
(27:54):
Am I right?
What more are we on the samepath on that, You're absolutely
right, and it's a businessdeduction.
Speaker 2 (27:59):
You can deduct it usually off your business income
tax or your personal income tax, depending on you work it.
What they do want to mentionyou mentioned Contracts for
things that people are trying torefinance.
One thing I want to say is isthat if you're using your, your
accounts receivable, if you'reusing your AR as part of the
(28:20):
basis for your, yoursecuritization, for your funding
, the Underwriters may want tosee the contracts upon which
those ARs are based.
So, for instance, if you'vedone worker, if you're doing
work for somebody else and youcan't expect to receive some
money in and you're gonna usethat Expectation of funds, so
(28:43):
like factoring cuz we that'swhat we call, that's factory.
Speaker 3 (28:46):
So we'll take the invoices from a business that we
got and they get money on that,okay, I got you all right.
Speaker 2 (28:52):
So basically, you want to make sure.
You want to make sure that theycan collect those months right.
Doesn't do any good if they'vegot a really bad contract.
Exactly, that's a perfect,perfect example.
Speaker 3 (29:02):
You are correct.
So we, you are right on that.
That is correct.
Yeah, and we just had thatincident this week.
That's what I'm kind ofsurprised you said that.
Speaker 2 (29:12):
But the contract happens so often, right?
Yeah, and there's one otherthing I want to think.
I want to mention if ourimportant things to put in a
contract, generally a Contractwill be construed against the
drafter.
So if you pull this contractdown off the internet or if you
write it up yourself or whatever, and you get somebody else
(29:32):
assigned and you're trying tosue them, if there's a term in
the contract of phrase or word,the definition of something, the
scope, anything, if anything'sup in the air as to what it
means, you're gonna lose.
It's gonna be construed againstthe drafting party.
Now you can, you can contractout of that.
There are provisions that youcan put in to stop that.
But remember that if you draftyour own contract, you're the
(29:58):
one that's gonna have to standup in front of the judge and
explain why you didn't explainit better.
Speaker 3 (30:03):
Wow, wow, that is wow .
That is so true that.
Thank you so much.
Is it anything else, which Iprobably got an idea what you're
going to say?
But I'm going to ask youanything else you would like to
tell our listeners for somerecommendation or a call of
action for them today?
Close it out, I'll show today.
Speaker 2 (30:22):
Remember this.
You know, I know attorneys soundlike they cost a lot of money
and it looks like they do, andyeah, you know I cost a lot of
money.
But what you get from that ismaybe a little piece of mind.
And I'm going to go back towhat I said the last time I was
(30:43):
on the show it's better to knowwhat your risks are and to
choose to not deal with thoseright now than it is to have
that decision made for you byevents and circumstances.
Going to an attorney that'spart of what you should get a
good outline of what those risks, what your exposure is on
(31:05):
things, what kind of things.
You know you might insureagainst or not insure against,
but you can make that choice.
That for me.
I want to educate my client sothat they know what these things
are, so they can make their owndecisions rather than have them
made by court, rather than havethem made by life.
They get to make thosedecisions and that empowers you
(31:28):
to do what you want to do inbusiness and to make your
business run better.
Speaker 3 (31:33):
Exactly.
Thank you, and that is so, sotrue.
And again, to add on to what hehas, is that, guys, these
contracts on our end, if they'renot correct, you looking at a
long time of you getting yourmoney or the possibility of you
not getting it at all.
That's why it's important aboutcontracts for you all to
understand how important it isto have those done correctly and
(31:56):
legally Okay.
Again, we want to thank MrMickey for coming in and we love
having him on our show.
We look forward to him comingback on our show as well, mr
Mickey.
So thank you, thank you, thankyou.
Speaker 2 (32:09):
Well, you're welcome, mr Jackie.
I love, I love being around you.
You are just an awesome person.
You know you bring light intothe room when you come in.
You got your smile.
You are one of the few peoplewho are smart enough to know
that there are things you don'tknow about.
Most lawyers don't have that.
Most lawyers know everythingright, but you're a real
(32:32):
pleasure to work with and I wantto recommend to people that if
you want to go to somebody who'sgoing to sit down with you and
take your time, take their timeto get to know you, get to know
your business and to try to helpyou get through things
effectively, conscientiously andinexpensively.
You know, give a shout toJackie, she's good.
Speaker 3 (32:51):
Thank you, thank you, thank you, and on that note I
want to end up.
Thank you so much for that Wantto end.
I know it have actually givenan overview to make sure
everybody understand, like arecap.
So we did talk about contractsand we talked about the scope of
terms that need to be in them.
According to Mickey, we need tobe careful of what those are.
Also, signatures is what hesaid.
You need to make sure that'sdone across the board.
(33:13):
And he talked about the clausesof different contracts and
things of that nature.
So he gave us some informationthat really would help us to
understand how contractors work.
And understanding contracts isnot just about compliance, you
all.
It's about empowering you as abusiness, as an investor, to
make informed financialdecisions.
So, and to our listeners if youlike what you heard and would
(33:37):
like to stay informed aboutgetting money for your business,
listen to TDJ equity fundinginsiders podcast on all major
podcast platforms.
Now, if you would like to be apart of our funding insiders
community where we give ourdocumentation and information
about the lending process andmore, subscribe at
wwwtdjequityllcnet backslashpodcast.
(34:02):
Until next time, thank you andtake care.
Speaker 1 (34:07):
We hope you enjoyed this episode of TDJ equity
funding insiders podcast.
If you'd like to be a guest orget in touch with us, please
visit our website atwwwtdjequityllcnet, forward
slash podcast or email us atpodcast at
wwwtdjequityfundinginsidersnet.
Until next time, take care.
Ready to get the inside scoop on equity funding?
Tune in to TDJ Equity FundingInsiders podcast for an in-depth
look at what it takes to accessfinancial capital and maximize
your investments, fromexperienced professionals,
including bankers, underwriters,loan officers and industry
(00:35):
experts, as they share theirunfiltered stories and valuable
lessons on securing funds.
Speaker 3 (00:47):
Welcome funding insiders to another exciting
episode of the TDJ EquityFunding Insiders podcast, your
go-to source for insights intothe world of financing, lending
and everything in between.
I'm your host, jacquelineJackson, and joining me today is
Mickey Fox as our co-host fortoday's episode of our attorney
(01:09):
hour.
Mickey is a local attorney witha great reputation,
specializing in business,commercial and real estate
matters.
His extensive experience alsoincludes corporate and business
consulting, as well as businessconstruction and real estate
excuse me, real estatelitigations at both the state
(01:31):
and federal levels.
So, as loan brokers, we haveseen where the clarity and
contractual agreement is veryimportant.
So with this episode, what wewant to do is to get a clear and
comprehensive contracts notonly outlined in the business
terms, but also establish aresponsibility and obligations
(01:52):
to each party.
This transparency builds afoundation of trust and falls on
a positive lending relationship.
So this episode, this episodewe're doing today, is actually
going to talk on that, withMickey being here as a legal
reference for us to discuss someof these questions.
So let's thank Mickey forcoming to our show today.
(02:14):
Welcome, mickey, mickey, andthank you.
Speaker 2 (02:17):
Good afternoon.
Speaker 3 (02:18):
Okay, great, all right, so let's get this started
.
If you don't mind, let's goahead and get into the questions
.
We've had you here before, sonow we have you back on the
contractual side as far as howit works with lending.
So we're going to start offwith our questions today, which
is basically.
The first one is how do welldrafted business contracts
(02:39):
contribute to the success of alending process, and what role
do they play in building trustbetween parties?
Speaker 2 (02:48):
Well, first of all, thank you very much for having
me back.
It's a pleasure to be here.
Contracts are really more thananything else.
There are evidence of thisdiscussion that you've had with
this other party about what yourdeal is.
If a contract is properlydrafted, then you know what
(03:08):
every term is, everything thatyou've agreed to, and it's set
out and defined so that there'sno disagreement later when you
come to the funding table, as towhat one piece means or what
one party assumes.
In order to really get a good,smooth funding process going,
you need to have that agreementdrafted out so that not just you
(03:29):
and your business partner orwhoever you're doing the
contract with, understands it,but also so that people like
Jackie understand what's goingon, what they're funding, and
then what the extent, the depthand breadth of that funding is,
and maybe even what collateralis there.
Speaker 3 (03:47):
Okay, so basically what you're saying and what we
just to add to it from thebroker side.
You're correct on theunderstanding of the parties,
because what happens is when youhave an agreement that you
brought to us saying this is mypartner, so we're all together
part of the lending, they wantto see if that agreement is
correct.
Is it set up like your saying?
(04:10):
It is Because they're going togo about what's in writing, not
about what people say and whatwe run into that makes the
lending process longer with thisis that the contracts that they
bring in, the language is notclear, and when the language is
not clear, that stops.
So I mean so, in your opinion,working with it being and give
some examples I know you and Ihave talked about this before of
(04:32):
people, how that that actuallyaffect them and what they were
actually doing with thecontracts not being what it
needs.
So definitely give us anexample to talk to us about that
.
Speaker 2 (04:41):
Well, let's start with just the basics of what a
contract is right.
It is a promise in exchange fora promise, and some of the most
important parts of that areclear identification and who the
parties to the contract are.
Do you adequately name yourselfor your business entity?
Do you provide ampleidentification as to who's
actually you know, for instance,taking out the loan?
(05:03):
You don't want to personally betaking it alone if it's for
your business entity, becausethen you're obliging yourself,
your personal assets, tosecuring that loan.
Maybe the second thing you wantto do is talk about what the
loan, what the loan covers, whatthe scope of it is.
Is it a maybe just anoperational loan to give you a
(05:24):
little free cash?
Is it a loan that's intended topurchase a piece of property or
secure a lease or somethinglike that?
You need to add that clearlydefined and more specifically
when it comes to collateralizingthe loan.
That is what guarantees theloan.
You want to make sure that theitems listed in that collateral
(05:46):
document are the items youintend to collateralize.
The other thing and I see thisa lot more than you would think,
and it doesn't happen so muchwith funding agreements, but
just agreements in general,contracts in general is that I
might have a contract where onlyone party signed it and I'm not
sure if the other party hasactually executed that.
Speaker 3 (06:09):
Right.
Speaker 2 (06:10):
Or I might have two different documents.
They're two different draftsmaybe of the same document where
both sides have signed, butthey've signed different drafts
and then it's up to us to try tofigure out what the party's
intended.
Really.
Those are the big things.
When it comes to fundingmatters like taking a loan out
(06:32):
on something, you want to beclear on the term of the loan,
the amount of the loan, how muchyour payments will be when the
payment due dates, are the verysimple things that kind of go
into making that loan.
You want to be careful ofthings like what puts you in
default on that loan.
It's amazing what can happen.
(06:54):
A lot of lenders there was aperiod of time where a lot of
lenders were going to think of auniversal default, which means
if you defaulted on any loanwith anybody whether it be your
credit card, your landlord, youruncle that could create default
.
Speaker 3 (07:11):
Student loans.
They have CAVAR.
It's the one we go to forstudent loans.
They'll look to see if youdefaulted on student loans.
Speaker 2 (07:18):
Do not be in default on your student loans if you're
trying to get credit foranything.
Speaker 3 (07:22):
Oh man, yes, that will follow you.
Speaker 2 (07:25):
So making sure that you have those elements written
in, and written in clearly,that's super important and it's
not something you need to worryabout so much when you're going
through somebody like Jackie,because that's part of their
business is making sure thatthese agreements have these
necessary terms.
But I mean, if you're justtrying to get along from, like I
(07:49):
said, your uncle Harold, youwant to make sure you have that.
And if you're lending money,you really want to be careful of
things like interest rates.
You don't want to run a foul ofusury.
You want to make sure that youhave payment due dates, things
like acceleration clauses.
There is a mess of things toconsider when we're dealing with
(08:11):
documents and evidence funding.
Speaker 3 (08:15):
So I had like just to go on what you said.
One of my mentors had made agood comment.
When it come to contracts, ifyou know, you have a tendency to
borrow even if you allow yourfamily to borrow money, like you
just mentioned, then a certainthing's usury and all that stuff
.
So when he said, come, get onelink, pay for it one time
legally to set you a contract up, then you can use that with
(08:37):
anybody else that's goingforward.
So if you're in any type ofbusiness, to actually, I believe
, to have an attorney and that'swhy we wanted you on this on
our show is that so we can showthe advantage that an attorney
is not just when things are not,you know it's criminal.
That's not the only time youneed to think about it.
When it comes to business,they're more your preparers.
They're going to be the onesyou're going to have in the
(08:58):
beginning before you need themin business, am I?
Speaker 2 (09:01):
correct.
I will tell you there's anongoing relationship that you
really need to have with yourattorney as well Because, for
instance, I can create a loandocument that maybe eight, nine
times out of 10 will work foryou in a given situation.
There are different things thatyou can that can create some
real big issues for you ifyou're not careful.
And this is talking about usury.
It's easy to run a fallow ausury law by putting too much of
(09:26):
a monthly interest rate in it.
If you, if you calculated as aPY, is that APR right?
If you collect a little toomuch and you don't refund it to
the customer, no, properlycredited over those can create
huge issues for you, Right, andespecially with family members.
(09:47):
You know, if I had a dollar forevery time somebody came to me
with a family member they hadloaned money to, I would not
have to practice law right now.
It just seems you know familyand friends.
It's always family and friendsor maybe business acquaintances,
somebody that you're veryfamiliar with.
It's better to have that inwriting because, again, when
(10:09):
things are good and when peopleare paying you, there's not a
problem.
When people aren't paying you,it's a problem, and in fact in
Texas.
It's possible that if you don'thave that loan in writing, you
may not be able to collect on itat all.
Speaker 3 (10:26):
Wow, wow, wow.
And see, that's what I'mtalking about, that important
stuff that we need to know,because a lot of us do business
on what we've heard or what wethought or what we found online.
You know we pretty much will doit that way, which is not best
when it comes to contractual,like I said, contracts that need
to be basically correct andlegal, and I think we start
(10:50):
businesses off our helps and wefeel like, oh, I don't need an
attorney for this, I don't needan attorney for that.
But the thing is you do If it'snothing, but you have them to
look at your contracts and getit set up for you.
One time you have a contractthat you continue to use, it's
worth investing in that in thebeginning of your business.
Then, waiting to you go tocourt and find out the contract
(11:10):
you got, it doesn't have any,it's not as weight in water.
You know what I'm saying.
So I mean, I know, you knowwhat I'm saying.
Speaker 2 (11:19):
Well and I know I said this last time I was on
your show Lawyers are good aboutthe it depends kind of answer.
And what that means is that ina given contract, if you change
a few facts here and there, itcan greatly affect the outcome
of the contract.
And if you change a few things,some of the provisions might
(11:44):
actually be illegal or they maynot work the way you need them
to work.
You know.
You know the overall contractmight, so it's good to sit down
with somebody and talk itthrough and even if you have
this document that you've used,you know, 20 times in the past
and it's always worked,understand that the law changes.
Speaker 3 (12:04):
That's true, it's true.
Speaker 2 (12:06):
And I'm going to tell people this.
I think it's pretty apparent,but the legislature is full of
lawyers who draft laws that areinterpreted by judges who are
lawyers, Right.
Speaker 3 (12:19):
Right.
Speaker 2 (12:20):
We have clients that are lawyers, right, you know, or
who have, or lawyers who haveclients.
There's a lot of lawyers in theprocess and anytime there's a
bunch of lawyers in the process,you know it's going to cost you
much.
Speaker 3 (12:33):
Right.
So he, basically he's saying soit's going to cost us either
way.
Okay, you know.
Yeah, it does.
Speaker 2 (12:43):
But look, an hour of my time, it's not that much.
It's not that much to pay for alawyer, right?
And just just a short amount oftime for the lawyers to sit
down.
Look at your documents.
Give you a good idea aboutwhat's what's workable, what's
not workable, what meaningrevision, right, what changes to
the law might have happened?
Speaker 3 (13:03):
Exactly.
Speaker 2 (13:05):
And also last time I had mentioned that the
department of labor changed itsits way of classifying 1099.
So, contractors or contractors,that changes everything.
You know.
Once that goes into effect, theway we do business as as
contractors, when we are people,is really going to change a lot
(13:27):
.
And if so, if your yourcontract agreement with those
1099 subcontractors worked thismonth, it won't work after
launch.
Right, things will change Right.
Speaker 3 (13:40):
So it's just great to .
If you're in business this iswhat we're talking about You're
in business and you want to growthis business, then these are
some things you have to look atcontracts being really legal
contracts, especially if you'relooking at funding.
And I do want to take time tomention the type of contracts we
see, or the lender need to see,before we actually go to
(14:01):
closing or even pre approval,and things are like that, and H
or approval is.
Some of the following are and Iwant you all to take notes of
this, listener your office lease.
Office lease needs to be signedby landlord and you, okay,
that's an office lease.
Okay, they need that.
They would like to have copiesof the original office lease.
They have asked for that attimes.
(14:23):
All right.
So then you have yourpartnership agreement, where any
type of agreement that you allhave, where you're going to
bring your partner in and, likeMickey talked about that, family
and like you said, we do familyfor his bar and money and
everything, but you, we alsobring family in and in business
with us, like you said, and it'sa good time when they come, but
it ain't a good time when theyleave.
(14:45):
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Speaker 4 (15:42):
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Speaker 3 (16:13):
So that's another thing we have to look at, which
is the partnership agreement andoperating agreement.
Again, these things like if youcan say they have to, you need
to sign them.
Your operating agreement ittells us legally how, who's
going to be running a day-to-dayoperation, what's going on,
who's all involved in thecompany.
It also let us know theownership, because anybody that
(16:34):
owns 20% or more in a company,any company that documents have
to be brought to the long table.
That's what people don'tunderstand.
If you own sometimes it's lessthan that they'll take 20% or
less, and sometimes it may be 10or 15, but either way go
Whatever the lender says then ifyou are part of that company,
you need to bring all thatinformation to that particular
(16:55):
company.
If you have someone and you work, like on a credit, people come
to us with the credit.
Well, if the majority owner hasthe lower credit, then that's
going to weigh the biggestweight on whose ownership and
what you all get.
That's something down the roadis a whole different show, but
they need to be aware of that.
The other kind of contract isan equipment contract purchases
and lease.
Some equipment does not allowyou to refinance or does allow
(17:20):
you to pay them off early, stufflike that.
You need an attorney to look atthese contracts that you have,
because then when you bring themto us and you want to
consolidate your debt, well,guess what, that $98,000 machine
that you got, we can't put thatunder the debt.
You got to pay that separateand now it's part of your debt.
Speaker 2 (17:36):
You want to have the attorney look at these things
before you enter into thosecontracts.
Speaker 3 (17:40):
Yeah, you're right Before you enter right.
Right, right, definitely.
So, thank you.
So definitely.
We want you and that's what I'msaying.
I mentioned these so you allcan have them to look at it, and
then any other type of debtcontracts you may have,
especially if you want us, asthe lenders, to actually combine
that.
If we're going to combine it,then we have to actually one see
that the contract, what youhave, is a legitimate contract
(18:03):
that you have and that issomething that can be refinanced
.
They got to check that out andsee if that can happen as well,
because we have found out somecontracts on some debts do not
allow you to do that.
And that was a biggest thing.
And, like you said, come to youbefore you get into those type
of contracts.
So let's talk about therelationship of having an
attorney.
So, from a legal perspective,what would you think for is the
(18:26):
language and the components thatshould be in a business
contract to protect them?
Name a couple of you.
You think they should justgenerally have in there for sure
.
Speaker 2 (18:35):
Well, ok.
So with every contract, like Isaid, you need to have clear
identification of the parties,the term of the contract, what
the contract's really about.
Is it about a loan?
Is it about a job you're doing?
You need to have the wholescope of that set out payment
terms, dates of completion,things like that and you need to
(19:00):
make sure that you have goodsignatures, people who are
authorized parties.
That's an important thing.
You have a signature bysomebody, maybe by a member, and
that member is not authorizedby the company or the clerk that
was at the front desk at thetime.
Right, those are the basicthings.
(19:20):
But there are other things inthese contracts that, when you
see them, I really want peopleto understand what they are.
There's a clause in almost everycontract and I'd like to see it
in all contracts.
It's called a corporationclause, but basically what it
(19:41):
says is look, never mind allthose talks we had before we
came to contract, never mind allthe discussions we had, the
emails we had, the documents wemight have talked about,
whatever agreements we mighthave had, this contract is the
only agreement.
It is the full and completeunderstanding of our agreement.
(20:02):
We're not going to rely on someemail chain that happened a
month ago.
We're going to rely just onthis contract.
So if you see that integrationclause, what it's saying is
we're not going to be looking atanything else other than this
one document.
Right, woeyer's called it anintegration clause and that's
kind of counterintuitive.
(20:23):
Some of the other clauses youwant to look for are things that
set forth the law of thecontract, especially if you're
kind of close to the state lineor if you're doing business with
somebody in another state.
You want to make sure that youhave Texas law.
If you can't apply that way,you kind of have a better
(20:46):
understanding of what you canexpect.
If you have Connecticut lawapplying, for instance, then you
have to rely on that law andsome of the expectations that
you have here in Texas won'tapply there.
Venue jurisdiction jurisdictionand venue are actually two
different things.
So when you see jurisdiction itdoesn't really mean anything
(21:10):
other than the court has theright to say what you're looking
for is a venue provision thatsays all the lawsuits, all
arbitration, anything you'rerising out of or coming through
this contract, they're going tobe done in a certain place.
And if you're in Cullen County,for instance, you don't want to
have a venue that's down inHouston.
Or if you're in Flower Mound,you don't want to come all the
(21:35):
way over to Cullen County.
That makes it a little easierfor you and, more importantly,
if you have an attorney that youhave an ongoing relationship
with, you don't want thatattorney to charge you for
traveling down to Houston forevery year.
So that's something that's kindof important.
You're looking for breachprovisions.
(21:56):
What events in this contract,what events will occur that will
cause you to be in breach orthe other party to be in breach
of the contract, and then whatpenalties result from that?
Is this a breach that can befixed?
Is there a notice requirementthat says, ok, if somebody
breaches it, I need to sendnotice and then you have 30 days
(22:19):
to fix it, or something likethat you want to.
Big thing is you want to checkfor indemnification requirements
, whole armless requirements.
Are you agreeing that you'regoing to pay the other guys
costs and fees and everything ifthere's a breach of the
agreement?
That's not just attorney's fees, that can be loss of business.
(22:40):
That can be you.
If they get sued by somebodyelse, you know, and they lose
something, you may be liable forthat as well.
And that's why you make it abig deal that you always want to
have a good insurance policy,good business insurance policy,
to cover those things you wantto look for.
(23:01):
You know attorneys fees Clausesto see who's gonna pay whose
attorneys fit If somebody wins alawsuit or some sort of
litigation or something orarbitration about this.
On these kind of provisions.
I like to see it with bothsides.
You know, if one side gets anattorney's fees provision, the
(23:22):
other side should get it to.
I think that's fair right.
But generally the the biggestpart is you got to remember
these agreements are not whathappens generally when things
are going well, right, it's whathappens when something goes
wrong.
For instance, what if you can'tget funding?
(23:42):
You've got an agreement topurchase something and you can't
get funding.
You know the standard contractshere in Texas, the ones put out
by the Texas Real EstateCommission the public called
promulgated contracts.
They usually have a A, anexample, and you said it.
(24:03):
But it's an extra document.
It's that deals with fundingand what happens if you don't.
If you can't get funding,that'll let you out of the
contract.
So you don't know any money.
That's a big one, you know.
You want to make sure that youknow what's gonna happen if you
don't get funding right.
Speaker 3 (24:19):
So it's more of a clause, protection clause, and
you write that's well isimportant to have real estate
agents as well, because a lot ofpeople like I can do stuff and
you can don't get me wrong, youcan but one thing about having a
real estate agent when I talkto my realtors that they know
the legal Legalities of realestate investment.
Speaker 2 (24:37):
So no, you have to be careful with that.
A real estate agent cannotadvise.
Let me finish.
That's what I'm saying.
Speaker 3 (24:44):
No, no, there's not one of this one.
I'm saying having a real estateagent, when it comes to that
real estate contract, it willhave everything in it to protect
you as a buyer or seller.
That's what I was saying.
That's why I say you want areal estate agent, because at
least that agent knows how it'ssupposed to go.
Speaker 2 (25:02):
And what's your right ?
Long as they're using thepromagated contracts from the
Texas real estate commission,we're in spot right, that's what
I was talking to.
Speaker 3 (25:11):
One to residential one is from the state is what I
was talking to.
One.
You know the the form, sothat's what I was looking at.
But I'm just saying, even withthat, the contract covers you is
safe, instead of you drawing upyour own contract and trying to
do Things your way.
That's what I'm saying.
Contracts across the board aregood If you're going to utilize
them and let them do what theyneed to do is what I'm saying.
Speaker 2 (25:33):
The standard contracts can be good.
There's a section in there forspecial conditions and what I
see sometimes is people gettinga little out over their skis and
writing provisions into thespecial conditions.
That Really amounts to thepractice of law and they create
problems and they don't mean toand I understand that as long as
their factual statements youknow about, you know what can
(25:56):
base with a house in thebarbecue, you know that kind of
stuff.
Right, that's fun.
But when they start talkingabout you know this, this
contract is subject to some ofthe contract or you know.
I've seen other provisions inthere.
They were much worse.
It gets a little Difficult andif there's anything like that
(26:19):
that you need in a contract,please go see an attorney.
Just, you know, spend the $255whatever it takes to go sit with
the attorney to make sure thatyou have it properly trapped it,
because I've had more than onecase of litigation when a real
estate agent got a little overtheir skis with things and it
just created a mess, completelyunintentional.
(26:42):
You know everybody means to dowell, but the increase problems
later right, right and of coursethat's that.
Speaker 3 (26:50):
That attorney, this in you when you given
suggestions, which is right.
They do need to come see anattorney on that.
But definitely understand mything is Contracts with people
looking at it, compared to youdoing.
I guess that's more, mickey,what we see a lot when not a lot
, but when people come withcontracts they're not come with
contracts, it was done byattorney.
You know, I'm saying they'recoming with it and that's what
(27:12):
I'm talking to, not the onesthat come correctly and, like
you said, definitely guys, eventhough we're not a real estate
Station podcast, but definitely,like I said, if you're in real
estate and you need to go lookat get some attorney, definitely
see an attorney.
I believe you're definitelycorrect on that.
So we want to do that.
I think he is basically justtalking about the contracts that
do come our way that we runinto that a lot of people have
(27:33):
no clue, like you said, thatthey should have had an attorney
involved and we'll hopefullythey can see from this.
We're not trying to get you tospend all.
We want you to spend money andthen you just deal with it's not
that.
It will slow you down andgetting money and it also will
cost you down the line you knowfor money if you don't have your
contracts correct.
Am I?
(27:54):
Am I right?
What more are we on the samepath on that, You're absolutely
right, and it's a businessdeduction.
Speaker 2 (27:59):
You can deduct it usually off your business income
tax or your personal income tax, depending on you work it.
What they do want to mentionyou mentioned Contracts for
things that people are trying torefinance.
One thing I want to say is isthat if you're using your, your
accounts receivable, if you'reusing your AR as part of the
(28:20):
basis for your, yoursecuritization, for your funding
, the Underwriters may want tosee the contracts upon which
those ARs are based.
So, for instance, if you'vedone worker, if you're doing
work for somebody else and youcan't expect to receive some
money in and you're gonna usethat Expectation of funds, so
(28:43):
like factoring cuz we that'swhat we call, that's factory.
Speaker 3 (28:46):
So we'll take the invoices from a business that we
got and they get money on that,okay, I got you all right.
Speaker 2 (28:52):
So basically, you want to make sure.
You want to make sure that theycan collect those months right.
Doesn't do any good if they'vegot a really bad contract.
Exactly, that's a perfect,perfect example.
Speaker 3 (29:02):
You are correct.
So we, you are right on that.
That is correct.
Yeah, and we just had thatincident this week.
That's what I'm kind ofsurprised you said that.
Speaker 2 (29:12):
But the contract happens so often, right?
Yeah, and there's one otherthing I want to think.
I want to mention if ourimportant things to put in a
contract, generally a Contractwill be construed against the
drafter.
So if you pull this contractdown off the internet or if you
write it up yourself or whatever, and you get somebody else
(29:32):
assigned and you're trying tosue them, if there's a term in
the contract of phrase or word,the definition of something, the
scope, anything, if anything'sup in the air as to what it
means, you're gonna lose.
It's gonna be construed againstthe drafting party.
Now you can, you can contractout of that.
There are provisions that youcan put in to stop that.
But remember that if you draftyour own contract, you're the
(29:58):
one that's gonna have to standup in front of the judge and
explain why you didn't explainit better.
Speaker 3 (30:03):
Wow, wow, that is wow .
That is so true that.
Thank you so much.
Is it anything else, which Iprobably got an idea what you're
going to say?
But I'm going to ask youanything else you would like to
tell our listeners for somerecommendation or a call of
action for them today?
Close it out, I'll show today.
Speaker 2 (30:22):
Remember this.
You know, I know attorneys soundlike they cost a lot of money
and it looks like they do, andyeah, you know I cost a lot of
money.
But what you get from that ismaybe a little piece of mind.
And I'm going to go back towhat I said the last time I was
(30:43):
on the show it's better to knowwhat your risks are and to
choose to not deal with thoseright now than it is to have
that decision made for you byevents and circumstances.
Going to an attorney that'spart of what you should get a
good outline of what those risks, what your exposure is on
(31:05):
things, what kind of things.
You know you might insureagainst or not insure against,
but you can make that choice.
That for me.
I want to educate my client sothat they know what these things
are, so they can make their owndecisions rather than have them
made by court, rather than havethem made by life.
They get to make thosedecisions and that empowers you
(31:28):
to do what you want to do inbusiness and to make your
business run better.
Speaker 3 (31:33):
Exactly.
Thank you, and that is so, sotrue.
And again, to add on to what hehas, is that, guys, these
contracts on our end, if they'renot correct, you looking at a
long time of you getting yourmoney or the possibility of you
not getting it at all.
That's why it's important aboutcontracts for you all to
understand how important it isto have those done correctly and
(31:56):
legally Okay.
Again, we want to thank MrMickey for coming in and we love
having him on our show.
We look forward to him comingback on our show as well, mr
Mickey.
So thank you, thank you, thankyou.
Speaker 2 (32:09):
Well, you're welcome, mr Jackie.
I love, I love being around you.
You are just an awesome person.
You know you bring light intothe room when you come in.
You got your smile.
You are one of the few peoplewho are smart enough to know
that there are things you don'tknow about.
Most lawyers don't have that.
Most lawyers know everythingright, but you're a real
(32:32):
pleasure to work with and I wantto recommend to people that if
you want to go to somebody who'sgoing to sit down with you and
take your time, take their timeto get to know you, get to know
your business and to try to helpyou get through things
effectively, conscientiously andinexpensively.
You know, give a shout toJackie, she's good.
Speaker 3 (32:51):
Thank you, thank you, thank you, and on that note I
want to end up.
Thank you so much for that Wantto end.
I know it have actually givenan overview to make sure
everybody understand, like arecap.
So we did talk about contractsand we talked about the scope of
terms that need to be in them.
According to Mickey, we need tobe careful of what those are.
Also, signatures is what hesaid.
You need to make sure that'sdone across the board.
(33:13):
And he talked about the clausesof different contracts and
things of that nature.
So he gave us some informationthat really would help us to
understand how contractors work.
And understanding contracts isnot just about compliance, you
all.
It's about empowering you as abusiness, as an investor, to
make informed financialdecisions.
So, and to our listeners if youlike what you heard and would
(33:37):
like to stay informed aboutgetting money for your business,
listen to TDJ equity fundinginsiders podcast on all major
podcast platforms.
Now, if you would like to be apart of our funding insiders
community where we give ourdocumentation and information
about the lending process andmore, subscribe at
wwwtdjequityllcnet backslashpodcast.
(34:02):
Until next time, thank you andtake care.
Speaker 1 (34:07):
We hope you enjoyed this episode of TDJ equity
funding insiders podcast.
If you'd like to be a guest orget in touch with us, please
visit our website atwwwtdjequityllcnet, forward
slash podcast or email us atpodcast at
wwwtdjequityfundinginsidersnet.
Until next time, take care.
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