Legal Question in Business Law in California

You didn't say, but I assume you'll be partners because you didn't mention creating any other kind of entity and "general partnership" is the default when two people go into business together with the intention to share profits.

Unless you have an agreement to the contrary, all property, tangible or intangible, brought into the business by the partners and used in its business will probably become property of the partnership. A partnership agreement can be used to reserve interests in things used by the partnership but intended to revert back to the person supplying it. Partnership agreements can be express or implied, oral or written, but the two of you really should figure all this out and put your understandings in writing. Now is the time to negotiate the details.

In the absence of an agreement, a court, following the applicable partnership statutes, would divide the partnership assets and liabilities 50-50, much like a divorce in a "no fault," community-property state like California.

I recommend getting a paperback self-help law or business book on "How to Start and Run a California Partnership" and both of you read it before you get in too deep or anybody gets their feet planted.

That is why you and your partner should sit down and work out the terms of your partnership agreement in writing. This will avoid difficulties in the future about who meant what or who said what. Consult with an attorney in your area.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

Absolutely correct. Put everything in writing. It does away with "He said - she said." Verbal agreements are what causes most disputes in business partnerships.