I had started a marketing business and had grown stagnate, and a new acquaintance said he would help finance some new marketing materials (about $2,000), and we had never really discussed how to pay him back or any percentage equity in the company that would be given up.
He has now said he wants his 15% of the company earnings (which there aren't any) or I can buy his 15% back. He is saying we had a verbal agreement and I DID NOT agree to anything like that. He is threatening me with legal counsel, blah blah blah.
There is nothing in writing. Nothing contractual. Not even his so called verbal agreement. And, the company has not made any money. So even if we did have an agreement, he would own 15% of nothing, right?
How should I proceed?
1 Answer from Attorneys
You should decide whether to give him some negotiated percentage of the business ownership (despite having no revenues - yet, ownership of a potentially profitable entity may have some value) or pay back the $2,000. I think it would be unwise to blow him off and simply say he invested in a losing proposition and lost.
In the future, do not make oral contracts relating to business, especially with friends and family. ALL business agreements should be committed to writing and reviewed by someone with business savvy and at least basic understanding of contract law. The couple hundred dollars it might cost for such professional services almost certainly will keep the story clear for all, and may enable you to keep a friend you otherwise sacrifice for a few bucks.
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