Legal Question in Business Law in California

The situation requires careful review by someone fully up-to-speed on partnership law. You characterize yourself as a "silent partner," which you may be, but the more legally significant issue is that this seems to be a partnership, if at all, based upon an oral agreement. California law has long recognized that pertnerships can be formed without a written agreement, either by oral agreement or with no express agreement at all, but by the conduct of the parties. Nevertheless, it is possible that an examination of the facts of your situation might show that you are a lender, not a partner -- and that you might be better off as such!

To get to your question, "....do I have any rights without a signed contract?" the answer is yes. One has rights (a) as a partner under an oral or an implied-in-fact partnership agreement, or (b) under an oral agreement to lend money (with some limitations).

Whether you can get your initial investment back depends upon both law and the facts of the particular business. If you are indeed a partner and the business has lost money, you have to share in the losses -- that's the concept of partnership -- sharing of profits and losses. If you weren't a partner, but were only a lender, you have a right to repayment of your loans whether or not the business did well.

So, you may be a partner, but that may not be the best situation with respect to getting your money back. The overall situation needs more careful review and more facts.

Mr. Whipple has provided an excellent answer in that how you will choose to proceed will depend upon the analysis of a business development attorney. Since there are many different ways to look at and resolve these types of situations, I would suggest that you speak with at least three attorneys to get a better idea on how to proceed.

By Grace...

Shawn Jackson ESQ. (707) 584-4529

Business Development Attorney EMAIL: [email protected]

www.CaliforniaBusinessDevelopmentAttorneys.com

www.CaliforniaBusinessDevelopmentCenter.com

www.CaliforniaBusinessDevelopmentPlans.com

www.CaliforniaBusinessDevelopmentIncubator.com

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