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The costliest legal mistakes investors make

Investors who rely on oral agreements or choose to complete their own legal documents are at risk of making some costly legal mistakes, according to Shine Lawyers’ professional negligence expert, Joseph Crane.

Speaking to Nest Egg, Mr Crane said investors tend to forgo legal advice in an effort to save money. However, he has seen that the smallest mistakes can have massive consequences and be costly to unravel.

When it comes to legal matters, here are the most common missteps investors often make.

Incorrectly drafting documents


According to Mr Crane, investors who choose to draft their own legal documents and forms should be sure to double and triple check their work.

“People sometimes rely on informal written agreements that they have drawn themselves. However, those agreements, while usually binding on the parties, are often ambiguous and do not usually cover typical eventualities which can end up causing disputes between the parties,” he said.

“If at any point, you are confused or don’t know what to do, get some help from a qualified professional.”

Relying on oral agreements

Oftentimes when investors choose to skip drafting legal documentation, they tend to rely on oral agreements. This is particularly common when investing with family and friends, Mr Crane said.

“However, disputes typically arise when people have different ideas about what has been agreed to. Getting good legal advice can not only help codify what has been agreed to, but it can also help clarify expectations,” he said.

“Also, if you want to end an agreement early, go see a lawyer. There can be serious, irreversible and costly consequences if you end an agreement without grounds or in the wrong way.”

The costliest legal mistakes investors make
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