Oral contract - implicit agreement.

[Kool-guy]

What is the name of your state (only U.S. law)? GA

Me and a friend had a verbal agreement to go for multi-store retail business. First store I put the money – second store he was supposed to – when we found the second store he wrote an advance check for $25K but the deal got cancelled so he got his money back. He had written $5K check to the first store for helping out during bad times. The franchisee offered 3rd store but then we decided to drop the retail business. Now business is closed and when I wanted him to pay his 50% of losses he said he did not put money in the first store so he does not owe anything. So I filed a law suit – and in his response he has acknowledged writing the checks $25K and $5K but denies anything else like verbal agreement and partnership. I wrote everything in email to his wife and another mutual friend - as a supporting document. I have email correspondences between me and him and the franchise people – in fact he had come and met the franchise officers few times in person and had discussions. Just wanted to know – the fact that he has acknowledged writing checks to purchase the second store and help me with my first store – would be enough proof to show in fact that we had an agreement – or implicit agreement for partnership in the business? How would the judge and jury normally look at this kind of situations? Normally these kind of cases - favors who - who trusted a friend on oral agreement - or who cheated since no written agreement is there?

 

[swalsh411]

Sounds like your friend made a 5k investment in your failed business.

Let's say your one store did great. Do you think you would be willing to share half the profits when he only invested 5k? Somehow I doubt it.

You learned an important lesson on getting things in writing.

 

[tranquility]

While there is no inherent deficiency in trying to prove up an oral partnership agreement, you have too many problems to be able to prove one up under the facts so far to really have a chance.

Are we just talking about the loss of 1/2 of the investment, or is there a continuing franchise agreement that needs to be taken care of? If the later, you may have a problem depending on the actual facts and one being guarantor for another--which would require a writing.

If the loss is large enough, see an attorney. It will cost a bit to even see if you can sue successfully (At least a chance to.). That is fair, people should not do complex business relationships with a handshake.

 

[Sloop John D]

The statute of frauds could be an issue here. Contracts involving this kind of money must generally be in writing. Courts won't enforce them otherwise. There are a few exceptions, and it looks like some of those exceptions might apply here, but you'll need to consult with an attorney from your state to find out for sure.

 

[tranquility]

The statute of frauds could be an issue here. Contracts involving this kind of money must generally be in writing. Courts won't enforce them otherwise. There are a few exceptions, and it looks like some of those exceptions might apply here, but you'll need to consult with an attorney from your state to find out for sure.

Please show me the portion of the statute of frauds where "this kind of money" requires a writing. (Other than the sale of goods, which is not implicated by the facts.)

 

[latigo]

What is the name of your state (only U.S. law)? GA

Me and a friend had a verbal agreement to go for multi-store retail business. First store I put the money – second store he was supposed to – when we found the second store he wrote an advance check for $25K but the deal got cancelled so he got his money back. He had written $5K check to the first store for helping out during bad times. The franchisee offered 3rd store but then we decided to drop the retail business. Now business is closed and when I wanted him to pay his 50% of losses he said he did not put money in the first store so he does not owe anything. So I filed a law suit – and in his response he has acknowledged writing the checks $25K and $5K but denies anything else like verbal agreement and partnership. I wrote everything in email to his wife and another mutual friend - as a supporting document. I have email correspondences between me and him and the franchise people – in fact he had come and met the franchise officers few times in person and had discussions. Just wanted to know – the fact that he has acknowledged writing checks to purchase the second store and help me with my first store – would be enough proof to show in fact that we had an agreement – or implicit agreement for partnership in the business? How would the judge and jury normally look at this kind of situations? Normally these kind of cases - favors who - who trusted a friend on oral agreement - or who cheated since no written agreement is there?

You may have filed a lawsuit, but for numerous reasons, apart from the absence of a writing, you have no lawsuit!

And if you are paying an attorney to prosecute the groundless claim, then he or she is stealing from you.

 

[latigo]

What is the name of your state (only U.S. law)? GA . . . . . .

Dear KC;

I've received you private message, but I think it better that you further "explain the whole situation" on the open board rather than in personal correspondence.

But I strongly recommend that before you invest any additional money with your irresolute attorney who seems to see the case as but lukewarm, and yet inexplicably recommended that it be filed - that you demand of her or him a written detailed legal analysis of the strengths and weaknesses of your cause of action.

Because from what you have provided I see no possibility of your proving that the "friend" ever agreed to assume any financial responsibility for the conduct of business related to the first franchise operation.

Nor is there any indication that he was committed to invest any capital in its acquisition, or play a role in management or contol, or to participate in profit or loss.

And without those three essential elements - (a joint interest in) - (1) capital investment, (2) management and control, and (3) the sharing or profit or loss - the law will not impose a partnership relationship. Nor could one have been formally created where any of those elements are lacking.

___________

My personal opinion is that you have been shafted by this so-called attorney. And that your "lawsuit" will not get beyond a motion to dismiss and/or a motion for summary judgment.

 

[Sloop John D]

Please show me the portion of the statute of frauds where "this kind of money" requires a writing.

I'm going off memory here, but I believe the amount was around $500. I believe you're right about that amount applying only where a transfer of goods is involved, but it's difficult to say what this particular agreement looks like considering it's a business agreement that wasn't reduced to writing. If the partner's investment was meant for supplying goods to their retail business, the statute of frauds could be implicated. It's also possible the statute of frauds could be implicated if there's going to be a transfer of interest in land, which seems likely. I think the statute of frauds must also be satisfied if one of the parties is going to become obligated for the other's debt.

Seems like there's a lot of room here to claim a statute of frauds defense. I definitely wouldn't overlook it.