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Lucy, Esq.
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Hello, My ex business partner and I took a business loan

Resolved Question:

Hello,

My ex business partner and I took a business loan of $25,000 from a private party a few years ago, and since then my partner has left the company and left me with the loan.

The loan agreement said we owe money equally, jointly, and severally. He is refusing to pay anything, so I would like to rewrite the agreement to protect myself, so I can pay half of $25,000, which I assume is my fair share of responsibility.

Are there any specific clauses or wordings that I should use to ensure the new agreement fully protects me and nullifies my responsibility on the older one once the private party signs it?

Thank you!
Submitted: 3 years ago.
Category: Business Law
Expert:  Lucy, Esq. replied 3 years ago.
Hi,

My name is XXXXX XXXXX I'd be happy to answer your questions today.

Since the loan was to you and your partner together, you are jointly and severally liable for the full amount. That agreement is enforceable. In order to make a new agreement, there would need to be an offer, acceptance, and consideration. That means that you would need to give the private party something in exchange for his agreeing not to try to collect the $12,500 from you. Without consideration, the agreement wouldn't be enforceable, and the lender would still be free to sue you for the full amount of the loan.

You and the lender also can't rewrite the agreement to make the other person solely liable for half the debt without his consent, which he seems unlikely to give.

Now, if you end up paying amounts that you believe your ex-partner should have paid, you can sue him for that portion of the debt. That is really the recourse in this situation.
Customer: replied 3 years ago.
Thank you, XXXXX XXXXX the private party forgive a portion of the debt and put that in writing?
Expert:  Lucy, Esq. replied 3 years ago.
A promise to forgive a valid debt is gratuitous, even if put in writing. It's only valid if you give him something in exchange for it.
Customer: replied 3 years ago.
Please explain how you would handle such a matter?
Expert:  Lucy, Esq. replied 3 years ago.
One option is to try to negotiate with the lender. See if there is some lesser amount that he'll accept in exchange for forgiving the debt. Consideration doesn't have to be of equal valid - as long as it's something, the judge won't look at whether it's considered adequate.

Another option is to pay on the loan and sue the third party for amounts that you paid on his behalf. The problem here is that I don't know how the company benefited from the loan or how it was used - if the company continued to benefit from the funds after the partner left, then he could argue that he is not liable, because he is no longer part of the business. But I also don't know if you went through a formal dissolution process - if you didn't, technically, he is still entitled to half of the partnership's assets and liable on half of the debts.
Customer: replied 3 years ago.
Ok thank you, XXXXX XXXXX to be clear:

I can offer the lender $1000 as consideration to forgive 1/2 the old loan of 25k, and then rewrite the agreement for $12,500 ?
Expert:  Lucy, Esq. replied 3 years ago.
You can. If he doesn't think he'll be able to collect, he might take it. He could also make a counter-offer, and you may be able to work things out.
Customer: replied 3 years ago.
can the $1000 in consideration be credited toward the rewritten loan of $12500?
Expert:  Lucy, Esq. replied 3 years ago.
No. The consideration has to be something separate, that he wouldn't otherwise be legally entitled to, because he's agreeing to forgive part of the loan, which he isn't legally obligated to do.
Customer: replied 3 years ago.
would $50 legally suffice as consideration?
Expert:  Lucy, Esq. replied 3 years ago.
Legally, even $1 can be considered sufficient consideration. If it's good enough for the parties, the judge won't question it.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 21022
Experience: Attorney
Lucy, Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.
Can you please write a sample of what the new agreement would have to state regarding the forgiveness, new consideration and any other important points you see fit to accomplish my goal?

I will add extra funds for your time when I accept the answer.

thank you
Expert:  Lucy, Esq. replied 3 years ago.
I'm sorry, but drafting the agreement, even a sample, crosses the line into representation. The terms and conditions of the site prohibit me from doing that.

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