Legal Question in Business Law in Arizona

The checks should be enough to get you past what is called the "Statute of Frauds" (requirement of some sort of writing that indicates an agreement exists) and partnerships are often oral (not that they should be). So, the good news is that you should be able to prove your ownership at some level for purposes of a buy-out. The bad news is that without a buy-sell agreement among the owners (a business "pre-nuptial") there is no requirement to buy or sell, or formula to determine the price. This means that both the fact of sale or purchase and the price are subject to dispute and often litigation. And, next to a personal divorce, partnership disputes are about as nasty, time-consuming and expensive as things to get. Legal fees for start ups can easily exceed the value of the Company - $10,000 for each party to start litigation is typical. I would see if you can agree to AAA arbitration and/or mediation of the dispute. While not cheap it is usually faster than litigation and you do not need to have an attorney to participate. There is much more to say but if you ever needed a lawyer in a business matter, this is it. For one thing the parties who are "in" often don't care about the parties who are "out" so cooperation is minimal. This means the outsiders must push every step of the way, etc. etc.

I agree with the advice given by Mr. hudspeth. I would add that it appears that you have in fact formed a partnership and there is state laws and cases precedent which control the legal rights, duties and obligations of the parties involved, both the in and the out groups or individuals. It is in everyone's best interests to meet together and resolve the conflicting interests informally, if each of the parties will come together and act reasonably and in good faith. If each group hires an attorney, it will probably be easier to reach an agreement because each group will have received advice about their legal rights and duties, and usually that means that they will take a more reasonable position, and be able to compromise.

Did you get the answer to your question. If not me let us know. And, I agree with Mr. Scher's answer. These "partnership disputes" can be nasty and the cheapest and most effective way to handle them is to have your "ducks in order," up front.

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