Article last updated: May 15, 2012
I. What is a Buy-Sell Agreement?
A buy-sell agreement is a contract requiring the sale of a business or investment interest upon the occurrence of a specified event. This event may be the death of one of the owners or their disability, retirement, divorce, bankruptcy, termination of employment or withdrawal, seizure by creditors, or a proposed transfer of an ownership interest by gift or sale. In a buy-sell agreement, one or more parties may obligate themselves to buy or may have the option to buy the business or investment interests from the party obligated to sell. A buy-sell agreement is recommended for many closely-held businesses, professional groups, or jointly owned investments, such as real estate.
Buy-sell agreements may:
A. Provide for the orderly transfer of business or investment interests on the death, retirement or disability of an owner. The agreement also could add voluntary or involuntary separation from the business, a desire to sell during lifetime, bankruptcy of the owner, divorce, and seizure by the owner’s creditors.
B. Permit the remaining owner(s) to retain control, eliminating conflicts with new owners who might object to compensation arrangements, employee benefits, dividends, development or disposition of jointly owned investments, etc., and to allow them to control admission of new owners.
C. Effect the transfer of the business to the right family members, such as children active in the business rather than the surviving spouse or children who are not active in the business.
D. Create a market at a fair price for the interests of owners who are or become inactive.
Without an agreement, Louisiana law may dictate the rights of owners and values of their interest. For example:
1. There is no legal obligation on the part of a corporation or other shareholders to purchase the owner’s stock.
2. In a partnership, a partner, his successors or a seizing creditor of a partner’s interest is entitled to an amount equal to the “value” of the share of the former partner’s interest. La. Civil Code art. 2823. If the value is not set forth in the partnership agreement or buy-sell agreement, any interested party can have a court determine value and order payment for the interest. La. Civil Code art. 2825. Payment must be in cash with interest “as soon as the amount is determined.”
3. A member of an LLC who is entitled to withdraw from the LLC must receive the “fair market value” of his interest “within a reasonable time.” La. R.S. 12:1325.
4. In divorce, if the former spouses cannot agree upon the division of community property, either party can seek a judicial partition of their property by filing a sworn descriptive list reflecting the “fair market value” of the assets. If the other spouse disagrees as to the fair market value, the court will determine fair market value. La. R.S. 9:2801. The court may include, in the valuation of any community-owned corporate, commercial, or professional business, the goodwill of the business, but not any goodwill attributable to any personal quality of the spouse awarded the business. La. R.S. 9:2801.2.
E. Fix the price for the sale and purchase.
F. Restrict the transferability of interests during lifetime, except perhaps to “permitted” transferees.
G. Reasonably assure the continuance of the business and reduce the risk of dissolution and loss of value.
H. Provide liquidity for owners and their estates.
I. Provide funds for the payment of death taxes and administration expenses.
J. Provide incentives for one or more younger or minority owners or key executives to join or remain with the business.
K. Protect the status of an entity taxable as an “S” corporation by prohibiting ownership by ineligible members.
II. Funding Buy-Sell Agreements
A. The odds of pre-retirement death or disability are very high.
The High Odds of Death and Disability Before Age 65
Odds of One or More Deaths
Before Age 65
(Number of Chances out of 100)
Two Owners Three Owners
Age Chances Age Chances
35-35 47.4 35-35-35 61.8
40-40 45.8 40-40-40 60.2
45-45 43.5 45-45-45 57.6
50-50 39.8 50-50-50 53.3
35-40 46.6 35-40-45 59.9
40-45 44.7 40-45-50 57.1
Odds of at least One Permanent Disability
(90 Days or Longer) Before Age 65
(Number of Chances Out of 100)
Two Owners Three Owners
Age Chances Age Chances
35-35 84.2 35-35-35 93.7
40-40 80.4 40-40-40 91.3
45-45 75.0 45-45-45 87.5
50-50 67.1 50-50-50 81.1
35-40 82.4 35-40-45 91.2
40-45 77.8 40-45-50 87.3
B. Methods of funding a buy-sell agreement include:
2. Cash Sinking Fund
3. Installment Payouts
4. Borrowing Funds
5. Life and Disability Insurance
III. Types of Buy-Sell Agreements
A. There are four (4) basic types of buy-sell agreements:
1. Entity Redemption Agreement. This is an agreement where the business enterprise agrees to buy (redeem) the business interest from the selling party.
2. Cross-Purchase Agreement. This is an agreement solely among owners who agree to buy each other’s interest.
3. “Wait-and-See” Agreement. This is an agreement when the business and its owners agree jointly or in the alternative to buy the seller’s interest.
4. Unilateral Agreement. This is an agreement when the sole owner is selling the entire business to one or more key employees, family members or other interested parties.
There are variations on each, such as “option” buy-sell agreements. The right to buy or sell may be given to one or both parties (put or call rights).
B. The price paid under a buy-sell agreement could be all cash, could be on an installment basis, or might be cash up to the amount of life insurance received to fund the agreement and on an installment basis for the rest.
IV. Life Insurance Funding of Entity Redemptions
1. The business entity is the applicant, owner and beneficiary of a policy insuring the life of the business owner whose interest will be purchased.
2. The business entity is the premium payor.
3. Premiums are not deductible.
B. Effects of life insurance funding.
1. Insurance proceeds are income tax-free to partnerships, limited liability companies and “S” corporations, but not necessarily to “C” corporations.
2. Surviving owners own 100% of entity.
3. “C” corporation basis does not change for the remaining stockholders.
4. For “S” corporation stockholders, basis increases by the amount of death proceeds received by the corporation in proportion to their interests.
5. Basis does not change for surviving partners in a partnership, unless the partners elect under I.R.C. § 754.
6. The selling business owner’s estate obtains a stepped up basis at death. If the buy-sell price is at fair market value, no gain or loss is reported. Business value is included in selling owner’s estate.
C. Corporate stock redemption tax traps for “C” corporations.
1. The cash value and the death proceeds received by a “C” corporation may be subject to the corporate alternative minimum tax. This alone should not be the reason for rejecting corporate owned life insurance as a means of funding a stock redemption. The impact of the AMT can only be determined each year when all the facts are known, and it may be that no additional tax is due.
2. Redemption payments to a “C” corporation shareholder can be taxable as ordinary dividend income to the extent of earnings and profits unless certain exceptions apply.
3. Capital gain treatment is available if one (1) of four (4) conditions are met:
a. If the redemption is not essentially equivalent to a dividend.
b. If the distribution is substantially disproportionate with respect to the shareholder.
c. If the redemption is a complete termination of the shareholder’s interest. A complete termination of interest requires a shareholder to sell all of the stock of the corporation and give up any management duties and directorships.
(1) Stock attribution rules of IRC §318 make complete terminations difficult to accomplish.
(2) A shareholder is deemed to constructively own stock owned by related parties as follows:
(a) Stock owned by a spouse, parents, children, and grandchildren, or stock constructively owned by them. There is no attribution among siblings.
(b) A shareholder owning 50% or more in value of a corporation is deemed to own proportionately the stock owned by the corporation. In turn, stock owned by a 50% or more shareholder is attributable to the Corporation.
(c) Stock owned by a partnership is attributed proportionately to its partners. Stock owned by partners is attributed to the partnership.
(d) Stock owned by an estate is attributable to the beneficiaries of the estate. Stock owned by the beneficiaries of an estate is attributable to the estate.
(e) Stock owned by a trust is attributed to its beneficiaries in proportion to their actuarial interests. Stock owned by beneficiaries of a trust (more than a 5% interest) is attributable to the trust.
(3) Family attribution rules may be waived if:
(a) Immediately after the redemption, the shareholder whose shares are redeemed has no ownership interest in the corporation and no interest as an officer, director or employee. Creditor and independent contractor relationships may be permitted.
(b) No interest is reacquired within 10 years after redemption except by gift or inheritance, by the redeemed shareholder
(c) The redeeming shareholder files a timely agreement with the I.R.S. to this effect.
(d) Waiver of attribution is difficult to accomplish in the family business context where shareholders include parents and children. For example, if a father leaves property to his daughter and stock to his wife, subject to a buy-sell agreement, the fact that the daughter is a beneficiary precludes a waiver of attribution.
d. If the redemption is required in order for the decedent’s estate to pay death taxes, subject to the following restrictions:
(1) The stock redeemed must be included in the decedent’s estate.
(2) Only an amount up to the amount of estate taxes and funeral and administration expenses can be redeemed.
(3) The value of the decedent’s stock of the redeeming corporation must exceed 35% of the decedent’s adjusted gross estate.
(4) IRC § 2035 (c)(1)(A) will include in the gross estate for the purpose of the § 303 any gifts made within the last three (3) years.
4. A “C” corporation could be exposed to the accumulated earnings tax if it accumulates liquid assets to fund a buy-sell agreement, although there is jurisprudence which has held that such accumulations can be for the reasonable needs of the business. Dickman Lumber Co. v. Commissioner, 355 F.2d 670 (9th Cir. 1966); Pelton Steel Casting Co. v. Commissioner, 251 F.2d 278 (7th Cir. 1958); But see, Mountain States Steel Foundries, Inc. v. Commissioner, 284 F.2d 737 (4th Cir. 1960); and Ted Bates & Co., Inc., 24 T.M.C. 1345 (1965).
D. Advantages of Entity Redemption Agreement.
1. Simplicity of only one life insurance policy per owner.
2. The business pays the life insurance premiums. For “C” corporations, one benefit is that the premiums are paid with money that has been taxed only to the business, and not taxed to the shareholders (as dividends). For all entities, the owners have greater control over ensuring premiums are timely paid. The owners allocate all premiums according to their percentage ownership in the entity.
3. The business owns the cash values of the policies, which means they can not be reduced by loans by the individual owners. Consider whether the business should be prohibited from accessing the cash values prior to its redemption obligation.
4. This agreement ensures compliance with the terms of the buy-sell agreement.
E. Disadvantages of Entity Redemption Agreement.
1. All surviving owners’ percentages of ownership are equally affected, which may cause the relative percentages of ownership to change. Unintended shifts in control may occur.
2. There is no change to the remaining shareholder’s basis in their “C” corporation stock so if the surviving owners of a “C” corporation later sell their stock, they may realize higher gains since their basis in stock does not increase.
3. In an “S” corporation there is some increase in tax basis of the surviving shareholders. The tax-free proceeds increase each shareholder’s basis in proportion to their ownership share. This increase is wasted to the extent it is allocated to the basis of the decedent’s stock.
4. It is difficult to convert from a redemption to a cross-purchase arrangement funded by life insurance without violating the transfer-for-value rule.
5. If the business is a family owned corporation, attribution may cause the funds received in a redemption to be treated as dividends to the decedent’s estate to the extent of earnings and profits where the attribution rules of I.R.C. Sec. 318 apply.
6. If the business is a “C” corporation, the corporate alternative minimum tax may cause the cash value increases and the death proceeds to be taxed.
7. The proceeds may be included in the value of the business for death tax purposes.
8. The insurance policy may be subject to attachment by the corporation’s creditors.
V. Life Insurance Funding Cross-Purchase Agreement
1. Each co-owner is the owner and beneficiary of policies on the other owners’ lives, not on their own lives. The policy proceeds are used to purchase the business or investment interest.
2. Premiums paid are not deductible.
1. Death benefit proceeds pass tax-free to the surviving owners.
2. A survivor’s tax basis in his business interest increases to the extent of the interest which is purchased.
3. In structuring cross-purchase agreements, survivorship clauses are recommended which limit the parties obligations if multiple deaths occur in a short time period.
C. Transfer for Value Tax Trap
1. Generally, life insurance death benefits are not subject to income tax.
2. However, the sale or other transfer for value of an existing policy or any interest in a policy will subject the death proceeds to income tax to the extent they exceed the purchase price and premiums paid by the transferee, unless one of the statutory exceptions to the transfer for value rule applies.
a. Transfer “for value” means any valuable consideration, not necessarily cash paid for a policy.
b. Transfer for value occurred where two shareholders each had acquired new policies on their own lives with no cash value and exchanged the policies with each other to fund a cross purchase agreement. The IRS concluded the buy-sell agreement was the “value”. PLR 7734048
c. A federal district court found a transfer for value where policy owned by shareholder and policy owned by corporation were transferred at no cost to two employees to partially finance the employees’ agreement to make future premium payments and to purchase the shareholder’s stock at his death.
3. Transfer for value problem may arise when owners attempt to shift an entity redemption funded by life insurance to a cross purchase agreement by distributing policies to non-insured owners or in a cross purchase arrangement where an owner dies owning life insurance policies on other owners’ lives.
4. Exceptions to Transfer for Value Rule
a. If transferee’s income tax basis in the policy is determined by the transferor’s tax basis (e.g., gift policy).
b. If transferee of the policy is the insured.
c. If the transferee is a partner of the insured.
d. If the transferee is a partnership in which the insured is a partner.
e. If the transferee is a corporation in which the insured is a shareholder or officer.
D. Cross-Purchase Advantages.
1. Cash values of the policies are not seizable by creditors. Policies are protected from the entity’s creditors.
2. It is easier to convert a cross-purchase plan into a stock redemption plan than vice versa because of the transfer-for-value rule.
3. The attribution rules of I.R.C. § 318 do not apply.
4. The corporate alternative minimum tax is not applicable.
5. The survivors use income-tax-free death benefits to buy the interest directly and receive a tax basis in their purchased business or investment interest equal to the amount paid. However, amounts paid for unrealized receivables, substantially appreciated inventory and goodwill in a sole proprietorship or partnership do not increase basis.
E. Disadvantages of the Cross-Purchase.
1. If there is a disparity in the ownership share, age or risk classification of the owners, the premium burden may be perceived to be inequitable. For example, a younger, minority owner will have a greater premium burden than an older, majority owner.
2. Non-payment of premiums might not be disclosed to the party who is to be bought out so there is less security knowing that the other owners are responsible for paying the premium on his or her life.
3. If there is a large number of owners, administration of the policies may become cumbersome.
4. Each remaining owner must adjust the insurance if a new owner is admitted or an existing owner departs to compensate for this change.
5. In a corporate setting, transfer-for-value problems may result upon the disposition of the policies owned by the selling or deceased shareholder on the lives of the remaining shareholders.
6. There may be a lost opportunity to leverage the premium payment if the business is a regular “C” corporation. It may be more expensive to pay premiums with the personal after-tax incomes of the shareholders.
7. Cash values of the policies may be accessed by the owners personally. This may negatively affect the buy-sell funding and may not be disclosed to the party who is to be bought out.
F. Variations on Cross Purchase
1. One variation of a cross-purchase agreement is an escrowed or trusteed buy-sell agreement which works well in the partnership context.
a. The business owners agree to buy and sell their respective business interests under a cross-purchase agreement.
b. The business owners also agree (under either an independent agreement or as part of the cross-purchase agreement) to appoint an administrator (“escrowee”) to perform the centralized function of overseeing and performing any buy-sell duties on behalf of the business owners.
c. Only one (1) life insurance policy is purchased for each insured.
2. Life insurance funding of the escrowed buy-sell.
a. The escrowee:
i. holds and is the beneficiary of one policy per insured, and
ii. credits each business owner with a pro rata interest in the policies covering the others.
To avoid estate inclusion of the death proceeds in an insured’s estate under I.R.C. § 2042, it is critical the agreement specify unequivocally that an insured will not be credited with any ownership interest in a policy insuring his or her life.
b. Each business owner is responsible for paying the proportionate share of the premium owed on each other business owner’s life. The escrowee may or may not be involved in the payment of the premiums.
c. At the death of a business owner, the escrowee:
i. receives the proceeds and delivers them to the estate of the decedent in exchange for the business interest,
ii. credits each surviving business owner’s account with the appropriate pro rata ownership of the purchased interest, and
iii. reallocates to the survivors the decedent’s escrowed interest in the policies insuring the survivors.
3. Hidden trap of escrowed buy-sell.
a. The transfer for value rules may be inadvertently triggered.
i. Even if the trustee is the initial owner of the policies, upon the first death, the beneficial or contractual interest of the decedent in the policies on the co-owner’s lives automatically shifts to the survivors. This amounts to a transfer-for-value even though there has been no physical transfer or change in the legal title of the policies.
ii. Consider using a partnership rather than a trust as the escrow vehicle. Additionally, if the shareholders are also partners in another business venture, an exception to the rule will be met and there will be no negative income tax consequences. There is no requirement in the statute or accompanying regulations that the partnership or the furtherance of its business be involved in the transfer of policy interest for the partner exception to apply. See PLR 9309021; but see Swanson v. Commissioner, T.C.M, 1974-61, aff’d, 518 F.2d 59 (8th Cir. 1975).
4. Recommend an escrowed buy-sell where:
a. There are many (more than five) owners of the business who want to participate.
b. The business is a partnership.
c. Centralized management and funding beyond the death of the first owner to die.
5. Another variation on the cross purchase agreement is the establishment of a separate “insurance LLC” to hold insurance on the life of one or more shareholders to perform the obligations under the cross purchase agreement. See PLR 200747002.
a. LLC manager must be an independent corporate Trustee.
b. LLC members cannot vote on insurance matters.
c. The LLC manager is required to use the life insurance proceeds as required in the buy-sell agreement.
d. The LLC must maintain a capital account for each member with special allocations of premiums and proceeds.
VI. “Wait and See” Agreement
1. This hybrid agreement combines the features of both the entity and cross purchase agreement.
2. Owners defer the choice between entity redemption and cross-purchase until a triggering event occurs.
a. Business is given the first option to purchase all, or a portion of, an owner’s interest.
b. If the business fails to purchase the interest, then the other owners have a second option or obligation to purchase the available interest.
c. If the other owners fail to purchase or only purchase a portion of the owner’s interest, then the business may be required to purchase the remainder.
3. The business owners generally are the owners, premium payers, and beneficiaries of the policies.
4. If the ultimate decision is to have the entity purchase, the other owners can lend the money to the entity or make additional capital contributions to the entity upon the triggering event.
B. The “wait-and-see” approach allows for unexpected contingencies by allowing the parties to the agreement to determine the best course of action and then take it, even many years after the agreement is put in place.
VII. Unilateral Agreement
A. Simply a one-way buy-out between a sole owner and a purchasing party.
B. Purchasing party (key employee, family member, or other interested party) obtains insurance on the life of the business owner to purchase at owner’s death. If desired, the buy-sell can cover a proposed lifetime disposition of the business or investment interest or the owner’s disability or retirement.
C. The purchasing party is the owner, beneficiary, and premium payer on the policy. Premium payments are not deductible.
VIII. Miscellaneous Value-Added Considerations
A. Buy-Sell Pricing Formulas
1. Fixed Price: Under this method, the parties agree to an initial price expressed as a fixed dollar amount which may be reviewed and adjusted by the parties periodically.
a. Does the agreement provide for periodic reevaluation?
b. If so, have periodic valuations been made?
c. Does the agreement provide for the consequences of a failure to revalue?
d. Is there an alternate valuation method if periodic valuation is not made either because of inattention, inability to agree, or by design.
e. If the fixed value is made on a per share basis, does the agreement cover the possibility of adjustments in the number of outstanding shares (for example, stock splits, stock dividends or recapitalizations)?
f. If there is more than one class of stock, does the agreement allocate the fixed price among the classes?
2. Book Value: Although the use of the term “book value” is susceptible to misunderstandings and ambiguities, it generally means the value as reflected on the books and records of the company. Succession. of Jurisich, 69 So.2d 361 (La. 1953). See, also, Mixon v. Iberia Surgical, LLC, 956 So.2d 78 (La. App. 3d cir. 2007) (agreement referred to owner being redeemed for “fair market value” but later stated that “book value” meant fair market value”); Aycock v. Allied Enterprises, Inc., 517 So. 2d 303 (La. App. 1st Cir. 1987) for the meaning of “generally acceptable business and accounting principles.”
a. But which books and records?
i. Balance sheet (audited or unaudited).
ii. Profit and loss statement.
iii. Tax return.
v. Monthly statements.
b. Is book value to be determined on a cash or accrual basis?
c. Who determines book value?
d. Does book value reflect real value? Book value might have been appropriate for a starting business with no earnings history, but is likely to far understate fair market value for a growing or mature business.
i. Intangibles (goodwill, tradename, etc.).
ii. Depreciable assets.
iii. Unbilled amounts for services.
iv. Contingent liabilities.
v. LIFO v. FIFO.
vi. Traded securities held as investment.
e. Does the agreement specify the date on which book value will be determined?
3. Adjusted Book Value: Have all appropriate adjustments been taken into consideration?
4. Appraised or “Fair Market” Value.
a. Does the agreement specify the date the valuation is to be made?
b. Who determines the value? If an appraiser, how is the appraiser selected? If both sides are to select an appraiser, what if they can’t agree on the selection? Does the agreement require that the appraiser have experience in valuing the particular type of business of the clients?
c. Are there guidelines or procedures set forth for the appraiser in valuing specific properties.
i. Real estate – book value or fair market value? If fair market value, which method (replacement cost, income approach, comparables)?
ii. Inventories – cost, market, lower of cost or market?
d. Is debt considered?
e. Should the interest being valued be subject to any premium for control or discount for minority interest and lack of marketability? An agreement may fix the estate tax value if negotiated at arm’s length, even though control premiums are not considered in valuing the stock of a majority shareholder, if it fixes the price for all shareholders. Rudolph v. U.S., 93-1 USTC par. 60, 130 (1993). Discounts may not be appropriate where the other owners or community spouse do not intend to sell, unless the buy-sell agreement specifically addresses discounts. Compare Cannon v. Bertrand, 2 So.3d 393 (2009) with Trahan v. Trahan, 43 So.3d 218 (La. App. 1st Cir. 2010).
f. Does the agreement specify that the appraisal is binding on all parties?
g. Should the agreement provide a minimum purchase price below which appraised value will not be considered?
h. What effect, if any, will be given to life insurance payable to the company.
i. Who pays for the appraisal and in what proportions?
5. Capitalization of Earnings.
a. Does the agreement define “earnings”? Should adjustments be made to take into account excessive compensation, executive “perks” and discretionary retirement plan contributions?
b. Who determines earnings?
c. Are historical or average earnings considered? If so, are the years to be weighted or is a straight average to be used?
d. Should any adjustment be made for extraordinary gains or losses?
e. Has an appropriate capitalization rate been selected?
6. Estate Tax Value.
a. Does not provide any certainty to the owners until one of them dies or until the estate tax return is accepted by the IRS.
i. What if no federal estate tax return is required to be filed?
ii. What if the initial value on the estate tax return is adjusted after audit? If the price is to be determined on the basis of the value as finally determined for estate tax purposes (i.e., after “audit”), what if the return is not audited? Will the parties have to wait until the statute of limitations for audit has run?
b. May give the estate an incentive to select a high value or, upon audit, to agree to a higher value since any additional estate tax will be less than the increased purchase price. Where marital deduction planning is used, it may make no difference to an estate to set a very high value.
7. Other Pricing Formulas.
a. Liquidation value.
b. Combination of methods.
c. “Financials in accordance with generally accepted accounting and business principles.”
B. Community property issues
1. Under Louisiana law, each spouse owns one-half of all community property, regardless of in whose name the asset is titled.
2. Does the buy-sell cover the termination of the community property regime, either by the death of either spouse, divorce or voluntary partition of community property? Almost 50% of all marriages end in divorce.
3. Will the nonactive spouse be bound by the buy-sell unless such spouse is a signatory to the agreement? What about signatory to any subsequent changes to the agreement?
4. Does the active spouse have the right and option to reacquire the former spouse’s interest either from the other owners or the entity and, if so, at what price?
C. Disability issues
1. Does the agreement specify who is to make the disability determination?
2. Is the definition of “disability” in the agreement the same in the disability policy funding the agreement?
3. Is there any presumption of disability if the disabled owner refuses to cooperate in the disability determination?
4. Are valid HIPPA waivers in place?
5. Does the agreement provide for the possible recovery of an apparently disabled owner?
D. Termination or withdrawal
1. Does the agreement distinguish, particularly as to pricing, between a withdrawal without cause and “for cause”. If “for cause”, is that term defined?
2. Does the agreement provide a different price for a “competitive” withdrawal from the business or professional practice?
E. Lifetime transfer issues
1. Does or should the agreement restrict lifetime transfers?
2. Is the triggering event limited to sales or does it include any disposition, including gifts?
3. Should sales or other transfers to certain family members (or trusts for their benefit) or to other owners be excluded from the transfer restrictions? If so, should the transferee be required to sign an agreement to be bound by the existing buy-sell agreement?
F. Life insurance issues
1. Does the agreement permit the insured to acquire life insurance policies on the insured’s life and, if so, under what circumstances?
a. Cross-owned life policies?
b. Upon insured’s disability or withdrawal?
2. Does the agreement provide for the disposition of insurance policies if the buy-sell agreement itself is terminated, such as due to the sale or merger of the business, liquidation, bankruptcy, or upon the mutual consent of the parties?
G. Dispute resolution issues
1. Does the agreement provide a method for dispute resolution, such as mediation or arbitration?
2. Who pays attorney fees and costs?
3. Which law governs the interpretation of the agreement?