How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Your Own Question
Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 54340
Experience:  32 years of experience practicing law and a businessman.
17027240
Type Your Business Law Question Here...
Richard is online now
A new question is answered every 9 seconds

6 members formed an LLC by singing all the appropriate paperwork

This answer was rated:

6 members formed an LLC by singing all the appropriate paperwork but the attorney did not file with the State. Now the majority member wants to walk away with all the profits and claim he is not legally bound by the agreement. Is this considered breach of contract or fraud?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good evening. No, he's not going to be able to walk away from this and claim all the profits. There is a signed agreement. If the lawyer failed to file the formation document with the state, there may not be a validly formed LLC, but what you do have is going to be considered a general partnership or joint venture. And, you will all be bound by this agreement regarding your relationship with each other. If he were to simply take the money of the entity in contravention of the terms of the agreement, you would have a cause of action for breach of contract and fraud but also usurpation of business opportunity if he conducts the same business on his own. Also, because he would basically be taking not only his share of the money but the shares of the other partners, you could contact the district attorney's office and pursue criminal prosecution for stealing/embezzling your money.


Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!

Richard and 2 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

IF THE LAWYER SHREDS THE AGREEMENT WOULD IT STILL BE VERBALY BINDING?

Do none of you have copies? You would have to prove its existence. You would also have a legal malpractice and fraud claim against the lawyer and would likely be able to discover its existence through discovery via emails, etc.

The lack of a written contract can be overcome by the concept of promissory estoppel, detrimental reliance, and unjust enrichment. This situation arises when Person A relied upon the verbal agreement, Person A performed based on such reliance, and because Person B defaulted, such reliance is now to Person A's detriment. Where there is i) partial performance by Person A based upon the mutual promises, ii) Person A relied upon such promises to perform, iii) Person B's failure to perform would be to Person A's detriment, and iv) result in Person B being unjustly enriched, Person A can overcome the legal requirement that the agreement be in writing.

Customer: replied 3 years ago.

THE LAWYER LEFT THE SIGNING WITH THE DOCUMENTS TO MAKE COPIES AND FILE WITH THE SECRETARY OF STATE. I ASKED FOR THE COPIES VIA EMAIL A FEW WEEKS LATER AND NEVER WAS PROVIDED WITH THEM. I APRECIATE YOUR ANSWER AND WILL GIVE YOU AN EXCELLENT RATING. THANK YOU.

Both the partner trying to abscond with the money and the business and the lawyer are liable. You have the right to pursue not only civil actions against both for actual and punitive damages, but also the right to file criminal charges. You should also file a formal ethics violation with the state bar association against the lawyer.


Thank you also so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help!

Related Business Law Questions