When it comes to business deals and transactions, it`s not uncommon for finders or intermediaries to be involved. These individuals help connect parties who may not have otherwise found each other and facilitate the completion of a business deal. However, it`s important to have a finders fee agreement in place to ensure that all parties are clear on the compensation involved.
In New York, finders fee agreements are legal and enforceable as long as they comply with state and federal laws. A finders fee agreement is a contract that outlines the terms and conditions of compensation for the finder`s services. This agreement is typically entered into between the finder and the party who benefits from the introduction.
The purpose of a finders fee agreement is to protect both the finder and the party they introduce. The agreement should clearly define the scope of the finder`s services, the fee amount, and the timeline for payment. It`s essential that the agreement is in writing and signed by both parties to avoid any misunderstandings or disputes down the road.
When drafting a finders fee agreement, it`s essential to ensure that it complies with the laws and regulations of New York State. The agreement should include provisions that address the following issues:
1. Definition of Finders Fee: The agreement should clearly define what constitutes a finder`s fee and the circumstances under which the finder will be entitled to compensation.
2. Scope of Services: The agreement should outline the services that the finder will be providing, including the specific introduction or transaction that they are facilitating.
3. Compensation: The agreement should clearly define the amount of compensation that the finder will receive for their services and the timeline for payment.
4. Confidentiality: The agreement should include provisions that ensure the confidentiality of any information disclosed during the finder`s services.
5. Termination: The agreement should include provisions for termination of the agreement, including how and when it can be terminated and the consequences of termination.
It`s important to note that in New York, finders who are not licensed brokers or dealers may only receive compensation for introducing parties to each other if they do not participate in the negotiations or structure of the transaction. If a finder is involved in negotiating the terms of the transaction or structuring the deal, they may be subject to licensure requirements.
In summary, a finders fee agreement is a critical document that protects both parties in a business transaction. It`s essential to ensure that the agreement complies with New York State laws and regulations and that it clearly defines the scope of services, compensation, and timelines for payment. If you are considering using a finder for your business transactions, it`s essential to work with a seasoned attorney who can help you draft a legally binding agreement that protects your interests.