Legal Question in Business Law in California

Yes, indeed! It does not take a written agreement to create a legal, enforceable partnership. Partnerships can be formed by written agreement, oral agreement, or by conduct alone, if that conduct reveals that the parties bahaved as though they were business partners.

California's law covering the formation, operation and dissolution of partnerships is found in the Corporations Code; mostly (for general partnerships) in the Uniform Partnership Act of 1994, found at Corporations Code sections 16100 through 16807 (and higher, but the later sections don't concern your situation). Of particular interest are sections 16101(10) defining "partnership agreement" to include written, oral and implied agreements; 16202 covering formation of partnerships; 16401-16405 covering relationship of partners to one another and to the partnership; and several sections in the 16601 and up portions of the Act covering dissolution of partnerships. Also, the law tends to create and enforce a presumption that all the partners are equal, unless there is evidence to the contrary.

I can't say your case is a sure winner, but if the evidence indicates the two of you behaved as though you were partners (i.e., you didn't form a corporation to run the business), a court would award you a fair share of the business' current valuation. Please contact me directly if you'd like a further (no cost) evaluation and maybe a demand letter written to your partner.

Recourse? Sure.

You always can sue to protect your interests in the partnership/company. You will have to prove what your interest is, and what you are entitled to, through admissible evidence. The proper business practice is to create a written contract and partnership agreement at the time before disputes arose. Since you don't know what to do now, or how to do it, consult with local business litigation counsel for help and representation. Counsel may be able to help you negotiate a 'deal', or may have to sue.

You may well have a claim.

You can prove the existence of a partnership through writings and through evidence of work together. When terms of the partnership are not explicit, the law "fills in the gaps," so to speak. Unless there is anything to the contrary in your writings, it is most likely that you would be 50/50 partners (assuming you can prove the partnership). In addition, your partner has no right simply to throw you over once he thinks he no longer needs you. If your partner's conduct is sufficiently egregious, he might be liable for punitive damages.

The only way to know for sure is to consult with a lawyer. You need to be extremely careful here, as this kind of case can be expensive to litigate. I would interview several lawyers, be careful in negotiating the terms of the lawyer's compensation.

Lawguru has a number of lawyers who practice in this area -- do not be shy in contacting more than one. Many of us here will provide a free consultation. Business cases also take a fair amount of time to evaluate up front -- some will offer a discounted rate for the investigation, before deciding whether or not to sue, and to evaluate the size of your recovery.