Legal Question in Business Law in

Re: Informal business partnership

Without a written partnership agreement, you will

need to rely on your jurisdiction's equivalent of

the Unifrom Partnership Act or similar act. I am

not sure where you are. If CA is in Califronia,

then you need to consult the California regs. for

partnerships which act as 'gap' fillers where only

a partial agreement or no agreement is written. If

you are 'CA' as in Canada, you need to consult your

Provincial law regarding business partnerships.

In general, under most US and Canadian law,

general partners (as opposed to 'limited' partners)

are liable for all debts of the partnership and

any partner can encumber the assets of the other

general partner(s) as long as they are acting

within the framework or provisions of the business

but not if they commit fraud or a felony outside

of the business operation. Normally, a general

partnership can be terminated 'at will' by any partner

unless provisions for an orderly termination are

written into a contract. The partnership then "winds

up' and is liquidated, and often a new partnership

is simultaneously created with the remaining partners.

In your case, if there were only two partners, the

period of liquidation of partnership assets would

result in a split of 50/50 of partnership assets and

liabilities. If you have filed a partnership return for

the business, it would list the assets of the business

and if you have contributed more than half, the split

or division of remaining assets is still 50/50

in most cases under US law. It may be different

if there were an agreement for unequal division

and there is evidence( a letter or memo or verbal

understanding with witnesses).

Your options are to 'liquidate' the assets of the

general partnership and divide the proceeds, if any,

equally. If there is still liability after liquidation,

both partners would be personally liable for any

remaining partnership debt. (This is why businesses

form corporation's and LLC's for limiting the personal liability

of the owners.)

You could also offer to 'buy out' your partner's interest,

and assume 100% control of the business and assets. Of course,

the liability at the bank would depend upon the nature of the bank loan,

and what security was given for the loan, etc.

If the funds were deposited/assigned directly to the business account,

then the debt would likely be considered a partnership liability, unless

otherwise characterised.The debt would remain for

the new owners of the business.

There is insufficienct information here to give you a determination.

Look at the terms of the loan (papers) and the

'understanding' of the parties. Were all the funds

used in the business? If yes, and there is a paper trial to show

purchases of supplies, etc, then this is probably a joint

debt of the general partners.Good luck in resolving your

partnership. MH