What legal actions should I take against my ex business partner?
I own an e-commerce company which is solely registered under my name. I had an oral business partnership agreement with a partner, which was my former boss. We became close friends and he decided he wanted to willingly help me with my business and wanted to own 50%. No contract or agreement was ever signed. About 2 years passed and I started to notice his change in attitude and loyalty. I came across many big lies he had told me about several business opportunities. He also lied and made up about 4 different people who I originally interacted with only via email, they were supposedly his "assistants". Enough is enough and I had to let my ex-business partner go and he is sending me invoices through his "assistants" email threatening me with invoices that I need to pay him thousands of dollars back within 10 days. Mind you, the invoices are merchandise we bought from vendors. He copied and pasted the items on an invoice he created with his IT business name and added any price on it. He says If I don't pay he will send it to collections. He also says he filled out a K1 form that he filed under my business with his investments, not sure if this is even legal since a K1 form is only for partnership companies with two or more registered owners. He even stole my domain and used it to make another website with my brand logo and name. He also has made several Instagram accounts using my brand name. I feel like he’s trying to steal the company. Not sure what to do, any help?
First of all, relax and take a deep breath, IMO tons of partnerships never really work because they are impulsively created at a time of some excitement.
1- Your oral agreement with your partner is a VALID legal agreement, check this link https://thelawdictionary.org/article/is-a-verbal-agreement-legally-binding/, no matter what you would say at this point, you will need to relax, assess the situation and see what can be done to get this partner out. There is no need to just keep fighting him, you have tons of communication with him, he can prove that he is a partner and you may owe him some money, his fake assistants, his made-up lies (based on your assessment) or whatever have nothing to do with the fact that you BOTH made an oral agreement and its legally binding.
2- His 1000's of dollars invoices: what are those for? Are they part of his 50% partnership, we know your opinion of him and that he faked some stuff, he is using your name on social media ... but let's face it, he thinks is your partner and he has ownership of your company, whether you like it or not, he may put more on the invoices of what you have actually owed him, so you need to face this now. I wouldn't worry about the collections, he won't be able to do much here as he will need to file some legal action or... I would say you will need to urgently assess how much you actually owe him based on the oral agreement and consult a lawyer to maybe do it as a payment plan, filing a legal action on some $10,000 or less at this stage when the lawyer himself going to ask you for $5,000-10,000 retainer makes no sense at this stage, at the end, you will end up paying the lawyer and maybe your friend/boss.
3- At this point, you know that this type of partnership will not work, get out of it ASAP, restructure your business, get another name if you can and rebuild a new successful business without any toxic partnership.
Also, when you say "my brand name" was this name created out of this oral agreement? If yes then forget it, you will waste your time and energy fighting for this, if you have such energy working hard every day then I suggest that you forget about this type of partnership, press the restart button soon.
Any legal actions in such a situation will cost you a lot of money, so, don't care, register new entity, new brand and say goodby to your toxic friend. His attempts to do something just will advertise your new business.
Hi Kimberly,
First off, we're very sorry to hear about this unfortunate set of circumstances. Operating a business can be demanding as-is, and these sorts of situations certainly don't make it any easier.
Consider yourself fortunate, though, that you had avoided signing any legally binding documents that would give your ex-business partner any leverage.
You'll definitely want to consult directly with a legal advisor, who will be able to provide you with clearer instructions on how to proceed with defending your business.
In the meantime, take a look over our guide to finding the perfect business partner: https://bit.ly/2DczgpO
We hope you find the information relevant and helpful!
Best of luck with the ex-business partner matter, and continued success with the business itself!