Legal Question in Business Law in Colorado

I started a business with a partner and the only Legal document we have is in our article of organization where we are both listed as co-owners. After 9 months my partner has decided to leave the business but feels she is entitled to 50% of all profits during the time we were in business. I am not agreeing to 50% as that does not seem fair based on the work. Because she is listed as a co-owner, is she legally entitled to 50% profit? If I only agree to 25% would she have a case against me? We have no assets. Thank you.


Asked on 12/10/09, 1:44 pm

1 Answer from Attorneys
Robert Murillo Pivotal Legal Ltd.

This, unfortunately, is a perfect example of what not do when you have a business with several co-owners. You should have had an attorney draft an operating agreement and this would provide the percentage, duties, valuation, rights on termination, so on. Now you are left only to oral agreements (what people incorrectly term verbal agreements). This co-owner will naturally claim that the agreement was for 50% of the business and given that it sounds like this was structured as a member managed LLC, they have a good basis for that claim.

You need to contact an attorney to resolve this matter or it will get messy very quickly.

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Answered on 12/15/09, 2:57 pm


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