Verbal Contract to do business

[eh33]

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

I had a partner approach me about starting a biz. As we were in discussions, an excellent opportunity came up from my contacts, and we had to move quickly. They already had an LLC in place, so we decided to run the project through it. We bought equipment and handled the project. No contract was ever drawn up. There were many emails, spreadsheets and payments for shared profits.

Now it appears that the company wants to do business without me - including still doing business with the clients I introduced without paying me. They seem to expect me to quietly just "go away" and just accept that they would prefer to do business alone. Do I have any recourse?

 

[quincy]

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

I had a partner approach me about starting a biz. As we were in discussions, an excellent opportunity came up from my contacts, and we had to move quickly. They already had an LLC in place, so we decided to run the project through it. We bought equipment and handled the project. No contract was ever drawn up. There were many emails, spreadsheets and payments for shared profits.

Now it appears that the company wants to do business without me - including still doing business with the clients I introduced without paying me. They seem to expect me to quietly just "go away" and just accept that they would prefer to do business alone. Do I have any recourse?

I am afraid I got lost in all of your "we's" and "they's."

Could you please provide some clarification?

Do you have your own business with your own clients?

Have you been paid for any of the work you have already done on the project?

Working without a written contract appears to have been a big mistake on your part.

 

[eh33]

I am afraid I got lost in all of your "we's" and "they's."

Could you please provide some clarification?

Do you have your own business with your own clients?

Have you been paid for any of the work you have already done on the project?

Working without a written contract appears to have been a big mistake on your part.

We went after a project together, and were awarded the project, which was quite large. We did the project for 3 years - and split all of the profits. We shared billing, costs, daily emails, travel and all details of the project. Yes, I have been paid for my portions of the project. We purchased some assets for the project, and I did obtain and affidavit of the properties that I own. During the three years, we also won several other projects, which we handled and split the profit. I have emails, and spreadsheets outlining the projects costs / profits for each project. I have been paid for most projects.

However - as it moved forward, and the major project "re-newed", my "partner" decided to handle the project alone and not include me. They have also went after other projects that I had introduced to "us" and kept all profits for themselves.

Do I have any recourse moving forward? I had read somewhere that a contract can be "implied" ?

 

[quincy]

We went after a project together, and were awarded the project, which was quite large. We did the project for 3 years - and split all of the profits. We shared billing, costs, daily emails, travel and all details of the project. Yes, I have been paid for my portions of the project. We purchased some assets for the project, and I did obtain and affidavit of the properties that I own. During the three years, we also won several other projects, which we handled and split the profit. I have emails, and spreadsheets outlining the projects costs / profits for each project. I have been paid for most projects.

However - as it moved forward, and the major project "re-newed", my "partner" decided to handle the project alone and not include me. They have also went after other projects that I had introduced to "us" and kept all profits for themselves.

Do I have any recourse moving forward? I had read somewhere that a contract can be "implied" ?

Who is the "we?" You and the person that you keep referring to as your partner?

"They" had an LLC and you said the project was "run through" this LLC. Is this LLC owned by your client/contact, the person you call your partner, someone else?

Yes, contracts can be implied. It appears that you worked on a project and were paid for your work. How exactly were you paid?

There was no written contract in place and, from what you have written, I do not see that there was a contract, implied or otherwise, that shows "they" would be continuing to have you work on the project or start on other projects with "them" (whoever they and them may be).

Your clarification, as a note, fell a bit short of clarifying the matter for me.

 

[eh33]

Who is the "we?" You and the person that you keep referring to as your partner?

"They" had an LLC and you said the project was "run through" this LLC. Is this LLC owned by your client/contact, the person you call your partner, someone else?

Yes, contracts can be implied. It appears that you worked on a project and were paid for your work. How exactly were you paid?

There was no written contract in place and, from what you have written, I do not see that there was a contract, implied or otherwise, that shows "they" would be continuing to have you work on the project or start on other projects with "them" (whoever they and them may be).

Your clarification, as a note, fell a bit short of clarifying the matter for me.

I did have my own business (LLC) and so did my partner. We were in the process of starting a business together and working on all of the details when a project/opportunity suddenly came up. We didn't have time to file for a new LLC, open a checking account, etc. The company we were working with could only award a certain dollar amount to one vendor, so we decided to bill 50% through my company and 50% through his until we could get our new LLC formed and up and ready.

We won the project and proceeded to handle it for three years. We purchased some very expensive equipment to execute the project. During this time, I asked many times to get our paperwork together / filed correctly. I had a draft operating agreement and filed a new LLC for us. He reviewed it and just seemed to drag his feet over and over and over. The only thing I was able to get him to sign off on was an affidavit stating my ownership of the purchased equipment. He always had an excuse for not wanting to file paperwork, or a "don't you trust me" kind of remark to make.

Many projects came through and as I do know its his nature to want to control most things, I tried not to "rock the boat" by complaining and constantly badgering him regarding the business as the projects came in. There are still a couple of projects that I haven't been paid for.

I feel a little taken advantage of - I helped get things rolling, gain exposure for his company, and as more lucrative projects started to roll in - he then just wanted to keep them for himself and not share profits with me or include me. I spent years working tirelessly when we were the only two people getting the company off the ground - and then when it really began "rolling", he excluded me. We were supposed to be starting a business together. Its documented in emails - and also "great job getting our first project together" types of things.

It doesn't seem right.

 

[quincy]

I did have my own business (LLC) and so did my partner. We were in the process of starting a business together and working on all of the details when a project/opportunity suddenly came up. We didn't have time to file for a new LLC, open a checking account, etc. The company we were working with could only award a certain dollar amount to one vendor, so we decided to bill 50% through my company and 50% through his until we could get our new LLC formed and up and ready.

We won the project and proceeded to handle it for three years. We purchased some very expensive equipment to execute the project. During this time, I asked many times to get our paperwork together / filed correctly. I had a draft operating agreement and filed a new LLC for us. He reviewed it and just seemed to drag his feet over and over and over. The only thing I was able to get him to sign off on was an affidavit stating my ownership of the purchased equipment. He always had an excuse for not wanting to file paperwork, or a "don't you trust me" kind of remark to make.

Many projects came through and as I do know its his nature to want to control most things, I tried not to "rock the boat" by complaining and constantly badgering him regarding the business as the projects came in. There are still a couple of projects that I haven't been paid for.

I feel a little taken advantage of - I helped get things rolling, gain exposure for his company, and as more lucrative projects started to roll in - he then just wanted to keep them for himself and not share profits with me or include me. I spent years working tirelessly when we were the only two people getting the company off the ground - and then when it really began "rolling", he excluded me. We were supposed to be starting a business together. Its documented in emails - and also "great job getting our first project together" types of things.

It doesn't seem right.

Thank you for explaining all of this. I have a clearer picture now of what is going on. I also think I might have been low on caffeine last night.

I agree with you that you were taken advantage of by your "partner." I do not think it is right what your purported partner has done. But I am not seeing that you have much legal recourse.

Although you are certainly entitled to be paid for the work you have already completed for the client, and you should have the right to reclaim the equipment you purchased, your LLC was never formed with both of you as members and you had no written partnership agreement.

Unfortunately, without either, you were both working together on the same project but you were working independent of the other. Each of you were getting paid (or entitled to get paid) separately for the work that you did on the project.

Now it appears that your "partner" no longer wishes to work together with you on any additional projects - and there is nothing in writing that commits him to continuing a working relationship with you or to share in any future projects with you. No formal agreement needs to be dissolved for him to stop working with you and to start working on his own through his own LLC.

Although you might want to review with an attorney in your area all of the facts of your business relationship with the partner, I am thinking it is time that you give up on believing you have a partner and, instead, start promoting your own business to attract new clients. Good luck.

 

[eh33]

Thank you for explaining all of this. I have a clearer picture now of what is going on. I also think I might have been low on caffeine last night.

I agree with you that you were taken advantage of by your "partner." I do not think it is right what your purported partner has done. But I am not seeing that you have much legal recourse.

Although you are certainly entitled to be paid for the work you have already completed for the client, and you should have the right to reclaim the equipment you purchased, your LLC was never formed with both of you as members and you had no written partnership agreement.

Unfortunately, without either, you were both working together on the same project but you were working independent of the other. Each of you were getting paid (or entitled to get paid) separately for the work that you did on the project.

Now it appears that your "partner" no longer wishes to work together with you on any additional projects - and there is nothing in writing that commits him to continuing a working relationship with you or to share in any future projects with you. No formal agreement needs to be dissolved for him to stop working with you and to start working on his own through his own LLC.

Although you might want to review with an attorney in your area all of the facts of your business relationship with the partner, I am thinking it is time that you give up on believing you have a partner and, instead, start promoting your own business to attract new clients. Good luck.

Thank you - and that was the intent. Its just that the clients I brought to the table, he is now taking as "his" and thats where I wanted the recourse.

 

[quincy]

Thank you - and that was the intent. Its just that the clients I brought to the table, he is now taking as "his" and thats where I wanted the recourse.

You apparently have a skill that the other fellow relied on - the skill of promoting a company to attract clients. You just have to use that skill for your own benefit now. And, if your company is better than the other company, you will not only find new clients, you might find your old clients returning.

And, again, you are entitled to all of the pay you earned for the work you did with the other guy on the project, and you can claim ownership of the equipment that was purchased for use on the project.

With that said, I do not have access to all of the facts. For a thorough review, you would probably be smart to review with a business law attorney in your area the way the business with the other guy was set up, and have the attorney personally review the current client contracts. From what you have posted, I am not seeing you have much legal recourse but the attorney you consult could see all of this differently.

Good luck.