broken partnership

[jodypaul]

6months ago I began a partnership with a friend involving direct sales products. Recently she has decided to quit the business. The partnership was a verbal agreement and because it was still so new we hadn't signed any legal contracts re: it. We both had about $1000 invested in expenses. No profit has been made yet and we still have outstanding bills which because she has left she no longer feels responsible for. The only assets we have our the sample products we have purchased for display. Since I would like to continue the business on my own what would be the best thing for me to do. She would like me to reimburse the $10000 but I'm already in the hole $1000 and don't have anything to give her. She does have a record of some misc. exp of about $300. These were all items that have already been used up in one way or another.
What if anything do I owe her and what should I do to make sure that she can't come back later should I become successful and profitable, to claim more money.

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by jodypaul:
6months ago I began a partnership with a friend involving direct sales products. Recently she has decided to quit the business. The partnership was a verbal agreement and because it was still so new we hadn't signed any legal contracts re: it. We both had about $1000 invested in expenses. No profit has been made yet and we still have outstanding bills which because she has left she no longer feels responsible for. The only assets we have our the sample products we have purchased for display. Since I would like to continue the business on my own what would be the best thing for me to do. She would like me to reimburse the $10000 but I'm already in the hole $1000 and don't have anything to give her. She does have a record of some misc. exp of about $300. These were all items that have already been used up in one way or another.
What if anything do I owe her and what should I do to make sure that she can't come back later should I become successful and profitable, to claim more money. <HR></BLOCKQUOTE>

Tell her and send a certified letter that each of you will part ways with each bearing their cost of $1000. Since there is no agreement in writing, it would be hard to collect from you later especially if she is no longer in the business and did not contribute anything to help you and your profits.

 

[Tracey]

1. Each partner is responsible for any & all debts incurred by the p'ship during the p'ship's existence. She has to pay for any debts you 2 incurred before she left. After she told you she was backing out, there was no p'ship & any new debts were yours alone.

2. She is only entitled to reimbursement of her investment if the p'ship had a net positive worth when she left. If the debts exceeded the assets (inventory + income), the p'ship was bankrupt at the time of dissolution & she gets nothing. I hope you have very clear records showing when each debt was incurred & how much your inventory was worth if it had been returned or liquidated.

Send her a letter affirming the dissolution of the p'ship & sending her a "winding up statement" -- an accounting of the p'ship assets & liabilities. Send her 1/2 of the profit. Tell her she gets nothing if you eventually make a profit, since the p'ship made no business contacts, nor entered into any sales contracts. Certified, return receipt mail, of course.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.