Now before we get too far into it, if you are looking for a way to tie someone to you for life with a binding contract then this is not the article for you. Here we will be talking about the situations when you and your pals may consider making an agreement together and why they may help stop friction and fallouts. When you make a deal with your mate then it will generally be about something that is important between one or all of you and will hold a risk of what happens if things don’t go to plan. Friendship is built on trust and so sometimes that can mean we assume that an agreement wouldn’t be required, but maybe that’s because they're usually so formal- in this context we will be focusing more on making a record of what you agree together so that you can remind yourself of the details whenever you or they are uncertain. The solution isn’t passing the details of your solicitor over every time you lend a fiver.
When you decide to house share
Living with friends is great and is a great way to reduce your bills whilst spending more time with the people you want to spend time with. A lot of people think that the tenancy agreement is the only agreement required, however there may be other considerations to make an agreement with more than just your landlord and letting agency. The most common reasons for frictions when sharing a house can be little things like is the contents of the fridge a common resource, and who buys the bin bags and expectations on how to manage cleaning the house. Once you've spent some time talking this through and recording what you agree upon you can get back to having a whale of a time.
When you borrow or lend something
Regardless of the strength of any friendship, money issues can be lethal. Something as simple as lending twenty pounds during a night out can cause friction if that money isn’t paid back or if it becomes a regular occurrence. Sometimes it pays to sweat the small stuff and make sure you're aligned on the expectations of any borrowing or lending. It doesn’t just stop with money though, keeping track of items that you have lent, or the condition they are returned in can also cause friction, taking the easy route may cause far more complications in the future, and trying to set expectations after the item has been lent instead of before is difficult and likely to lead to fallouts. Talk and record the outcome, and relax
When you start a business together
Starting a business with friends incorporates money, time, trust, strategy and your relationship with them. That means there is a lot to align on and assumptions need to be validated as soon as possible, and will be an ongoing process to make sure communication is clear and that you are all working in the same direction. Areas to consider are rolls, who has the deciding vote on certain topics, how will you split the costs, how will you split the work, how you will split the shares of the business and how you will share the operating profits. This activity is definitely best done before getting too deep, but can be done after you start, just remember the later you leave it the greater the chance of challenges.
When you buy something together
Sharing the cost of a purchase can be a great way to make it affordable, especially when it has a high value, or entails some form of credit agreement with a third party. Examples of this could be buying a TV in a shared home, or even a campervan to go on epic road trips with. There is more than the initial purchase value at stake as some purchases will have running costs associated such as a vehicle, or storage criteria for large items if you don’t live at the same address. Considerations would be how much of the item do you each own- equal shares or a weighting, how to split the running costs or distribute the usage of it, and what you will do when one of you wants to relinquish their stake in it.
There are other reasons that you may want to consider an agreement or a contract for, but that doesn’t mean you now need to start looking for a solicitor. Most of the time these agreements are more about recording your intentions for reference later than something you are planning to enforce. However if you do want to make an agreement which is legally binding you will have to consider the 5 elements of a contract- why not check out our blog piece on this if that is something you want to investigate- you can find that here. At wegree we are dedicated to making agreements easy to make and to manage and might be just what you are looking for. Sign up to be notified when we launch so you can make the process of making agreements with friends and family simple.
We hope you have enjoyed this article. As always, your feedback and suggestions are welcome.