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Verbal Ownership Agreement

Business Law discussions

Verbal Ownership Agreement

Postby Flyn » Sat Oct 29, 2016 1:25 am

My friend believes he is a part owner in a bike shop because of a verbal agreement between him and the owner of the business.  The owner of the business verbally agreed to give my friend a percent of the business if my friend payed a portion of the overhead costs.  My friend had paid 100% of the rent and utilities for this business.  Is he now legally & contractually a part owner of the business?  When the owner signed and deposited my friends checks, did that automatically make him a partner???
Flyn
 
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Joined: Fri Jan 31, 2014 4:59 am

Verbal Ownership Agreement

Postby Thurl » Sat Oct 29, 2016 8:07 am

There can certainly be a partnership based solely on a verbal agreement.  There is no requirement that a partnership have a written agreement.

From your brief description(which is obviously only from your friend's point of view), it does sound like a partnership was formed.  But the partnership would be based on the agreement of the parties, not on paying the rent or utilities.  In the absence of an agreement to the contrary, those payments could just as easily be construed as a loan or a gift.  The fact that the owner signed and deposited your friend's checks, certainly did not "automatically make him a partner."   Only an agreement between the parties can do that.

The problem with any verbal agreement is proof.  If your friend has no written document and no credible third party with first hand knowledge who can testify in his favor, the burden of proving that a partnership exists may be very difficult.  He may well have the facts in his favor to support the creation of a partnership, but he also needs an ability to prove those facts.

He should leave nothing to chance.  He should get it in writing.
Thurl
 
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Verbal Ownership Agreement

Postby Beldon » Sat Oct 29, 2016 12:27 pm

My friend believes he is a part owner in a bike shop because of a verbal agreement between him and the owner of the business.  The owner of the business verbally agreed to give my friend a percent of the business if my friend payed a portion of the overhead costs.  My friend had paid 100% of the rent and utilities for this business.  Is he now legally & contractually a part owner of the business?  When the owner signed and deposited my friends checks, did that automatically make him a partner???
Beldon
 
Posts: 42
Joined: Tue Mar 11, 2014 7:24 am


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