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taratill
taratill, Solicitor
Category: Employment Law
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Experience:  15 years experience of advising on employment law matters
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In short, I am in a partnership with a friend with

Resolved Question:

Hello,
In short, I am in a partnership with a friend with no signed agreement, under 1 year (came together in November 2014, soft launched in March). I feel I made a mistake working with this friend and would like to buy her out so to speak. We've not made any money yet, and haven't really gotten off the ground - 1 paying customer. What procedure do I need to follow to buy her out? Can I offer to pay her back the initial investment she made? Do you need the long story to be able to answer that? Many thanks. Laura
Submitted: 1 year ago.
Category: Employment Law
Expert:  taratill replied 1 year ago.
Hello my name is ***** ***** I am happy to help you today. Do you have a written form of partnership agreement?
Customer: replied 1 year ago.

No. I did type one up that we both approved but for some reason who I suggested to witness it, my business partner wasn't keen on. To be honest it has since sat on the back burner.

Expert:  taratill replied 1 year ago.
Ok but did this agreement (albeit unsigned) set out what would happen in the event that things did not work out?
Customer: replied 1 year ago.

Yes:

Termination: This partnership shall be terminated by the death or material incapacity of any partner, mutual agreement, or upon the written request for termination made by any one partner. Upon termination by reason of death, incapacity or request, the remaining partners shall have the right to continue the business of the partnership on their own behalf or together with new or additional partners, provided they pay the terminated partner the fair market value of his partnership interest (as determined by the accountant for the partnership) together with suitable indemnification for all of their existing partnership obligations.

15.1 If the business terminates before the business make a profit, the split of any asset value sold would be 19/15 based on original investment made (see Section 5).

15. Arbitration: Any dispute or controversy herein shall be settled by arbitration in accordance with the Arbitration Act.

Expert:  taratill replied 1 year ago.
Ok even though this is not a signed agreement it is useful in that it sets out clearly the intentions of the parties.
Provided you stick to what is written in this agreement you cannot have any comeback from your partner.
At the moment it does not seem that there can be a valid argument that the business has goodwill (with only one customer). If there is profit then this should be dealt with in accordance with this agreement.
A sensible suggestion would be to return the investment plus a split of any profit in the same percentage?
If you have any further questions please do ask. If I have answered your question I would be grateful if you would take the time to rate my answer. Thank you and all the best.
taratill, Solicitor
Category: Employment Law
Satisfied Customers: 6305
Experience: 15 years experience of advising on employment law matters
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