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    Ending a partnership
    I am a 20% owner of a business and my partner owns the other 80%. We each put in an equal amount of time getting the business going. After the first six months my partner opened another business without me and put all of his time into that and pretty much neglected our business leaving me to take care of it. I eventually moved out of town and am no longer putting time into the business. He now feels I shouldn't receive any of the profits as I am not there, although I have not made back any of my initial investment. He says he will pay me back a little at a time, but with no interest. We don't have a formal partnership aggreement other than bank and tax records which show our shares of the business. What can I do, as I don't wish to provide him with an interest free loan for the next year or two.


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    Re: Ending a partnership
    You already know your mistake: " We don't have a formal partnership aggreement". Obviously though, at this point, you just have to make the best of it.

    What is difficult to grasp is the following statement: "I am a 20% owner of a business and my partner owns the other 80%.". How is this 80/20 relationship defined?

    Without anything formal, the only way forward is negotiation, unless you can both agree on a mediator. The person who least needs the business is often the winner in these scenarios, as they can call the bluff of the other.

    It's a difficult situation for sure.


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    Quote Originally Posted by Morph25 View Post
    You already know your mistake: " We don't have a formal partnership aggreement". Obviously though, at this point, you just have to make the best of it.

    What is difficult to grasp is the following statement: "I am a 20% owner of a business and my partner owns the other 80%.". How is this 80/20 relationship defined?

    Without anything formal, the only way forward is negotiation, unless you can both agree on a mediator. The person who least needs the business is often the winner in these scenarios, as they can call the bluff of the other.

    It's a difficult situation for sure.
    He's correct. Since you have no legal papers and that a partnership agreement and contract is necessary in order for you to claim your share, you can't do anything. You should sue him if he does not give back the 20% capital he owes you. Oral agreements may work depending on the laws that govern your country, if that's the case, you can recover from him.


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    You are entitled to receive profits. In a contract of partnership, the partners (both of you) agree to contribute cash, property, and/or services to a common fund with the intention of distributing the profits among themselves. Don't just settle for a return of initial investment. It doesn't matter if you went away or not. You contributed something to the partnership so you are entitled to get something in return. Your money was used so you deserve a share in the profits.


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    Technically you still own 20% of the business. Since your partner is unwilling to either send you part of the profits or pay back the money you put into the business one of the ways to get out of your partnership would be through selling your shares in the business to someone else. Ask your partner one more time if he'll pay back your money in lump-some. If he declines, then use your trump card. Sell your shares. Of course it's not as simple as it sounds but it's worth a shot. OR, if you invested a lot of money [which you don't want to lose] then use an intermediary to sort out your issues. Most law firms offer this service. If that doesn't settle his hash, then go to court.

    courts often divide assets and liabilities 50-50 regardless of any disputes.
    The cost, however can be quite high.


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    Tricky indeed. Gather all the paperwork you can to prove that you actually own 20% of the company... if you have enough to make a legal stand then obviously you are entitled to the money. (either 20% of the profits OR alternatively, which would probably be a better choice: your partner buying your shares from you)


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    I think there is a solution to this in some ways that you could talk between yourselves in order to reach an amicable settlement. I can understand that business is business, but personally, I would also take into consideration the "personal relationship" that you had with your business partner. In this very competitive world, a NETWORK is so valuable more than money as it is more difficult to establish than opening a business.


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    Quote Originally Posted by fredkawig View Post
    He's correct. Since you have no legal papers and that a partnership agreement and contract is necessary in order for you to claim your share, you can't do anything. You should sue him if he does not give back the 20% capital he owes you. Oral agreements may work depending on the laws that govern your country, if that's the case, you can recover from him.
    You contradicted yourself here, but you make good points. Most developed countries do recognize oral contracts, and quite frequently, especially in a business setting, oral contracts are not usually dismissed by the other party in your matter. Signed contracts are not always a necessity, and quite frequently judgements are made without the presence of physical paper contracts.

    As others have said, lawfully you own 20% of that business. 20% of the business shares entitles you to 20% of the profits generated by that company. Your partner has to give you this money. It's the law. If he doesn't want to, then maybe you should start discussions with him about you possibly offering your shares in a sale to him. If he doesn't like the idea or refuses to negotiate with you on the idea, then tell him you are considering selling your shares to a third party - this may force his hand slightly as he realizes he's not going to get away with conning you.


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    Honestly, a partnership agreement should have been the first thing you two did. I doubt he will be willing to sign one now, so that makes things very limited. I think you should try sitting down with him and talking. Try to negotiate and hopefully make things better for yourself. Just try not to dig yourself a hole that you cannot get out of.


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    Either the percentages have to change or you have to change away from the business. Ownership alone is not enough to keep a market selling their product. Talk to him, and be very assertive, you should get more.


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