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Zachary
Zachary, Attorney
Category: Legal
Satisfied Customers: 3926
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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This is business law, my husband and I, signed and have an

Customer Question

This is business law, my husband and I, signed and have an operating agreement where we both became partners in a new company. From the start it was supposed to be us and one other person. But he said he did not feel right having another business without his other partner so he invited him to join our business. We were against it but this guy for a partner so we said yes, they drew up an operating agreement and kept rushing him saying it had to be signed right now because of insurance reasons, he signed without reading because they would not give him time. Our percentage went from 50 to 33, there are 4 equal partners myself, my husband and the two of them but when the fourth partner was added their shares went up as well as voting shares. They insisted and would not leave him alone about it, that he give up his job to work full time on this new project, which was already working and doing fine to begin with. Our first partner said he was going to have to use funds from his previous. We did NOT know the new guy was going to be signing for everything and have his name on all the financial stuff. When we sat down and read the operating agreement it was then that we realized they had cheated us out of shares. Well we both understand that he should have read them before signing but they were pushing because of an insurance issue and assured him nothing amiss was in the contract. Things became unbearable and we decided that either he had to go or we got our shares back. Well we were in the middle of working things out when this guy yesterday started screaming and saying he wanted everything out of his name and he either wanted to be bought out or wanted us out. What we brought to the table was all the work and the crew to do it what they put in was the finances. But without us and our crew they have no work. He said we have one week. My question is what is our recourse? What if we refuse to buy him out and refuse to sell? Also what about the insistence that he give up a career job when things were running smoothly anyway? Can we get compensation for that? Also states that we can look at books anytime we want but when asked to do so we told that they would print us out a financial statement every quarter. Now we have one week and the one partner is cutting off all operating insurances and he is cutting off all health insurances for all the employees as well. Is there any recourse we have where we do not lose everything? What happens if we refuse to do either one?
Submitted: 10 months ago.
Category: Legal
Expert:  Zachary replied 10 months ago.
Hi,

My name is XXXXX XXXXX I will be assisting you with your legal question.


The law charges you with the duty to read a contract before you sign it, and you are presumed to know everything in the contract when you sign it. Under the circumstances you are describing, you are bound by the contract's terms.

In regard to your options, I would need to actually see the contract before I can give you any specific answers. Can you scan it and attach it to your answer here?
Customer: replied 10 months ago.
No, I cannot. It is a generic operating agreement.ask me what you are looking for and I will tell you what it says.
Expert:  Zachary replied 10 months ago.
I'm looking for sections that talk about "termination", "events of default", "buy out" rights, or anything like that. Also, any section which talks about "dispute resolution" or "arbitration"

Your rights are going to be defined by the contract.

In your review of the contract, go ahead and also point out to me any section of the contract which you believe that the other side has breached.

Finally, is there any section which specifically states that you have to perform any work?
Zachary, Attorney
Category: Legal
Satisfied Customers: 3926
Experience: Lead trial/International commercial attorney licensed 11 yrs
Zachary and 16 other Legal Specialists are ready to help you
Customer: replied 10 months ago.
Can I fax contract to you?
Expert:  Zachary replied 10 months ago.
Unfortunately not. We only have capabilities of receiving scanned documents and the website does not allow us to provide you with our actual law office fax numbers.

If there is no way for you to send the document to me, then I can only give you general information on your options. If that is fine, let me know.
Customer: replied 10 months ago.
Then can we discuss this via phone?
Expert:  Zachary replied 10 months ago.
I'm sorry. We can only talk with you through this forum. This is a situation which is not really under my control and is dictated by the website rules, and the rules of professional conduct. If we were to communicate directly and not through this site, I would need to form an attorney-client relationship with you, which is much more expensive. The website really is for general information on the law and we do not form an attorney client relationship with you when you use this site.

This question remains open for as long as you need it to. What you can do is go to a FedEx store or other place that has a scanner and scan the document and then email it to me through the website at:

experts@pearl.com attn: Zachary re: http://www.justanswer.com/law/81nnc-business-law-husband-i-signed.html?src=nql
Customer: replied 10 months ago.
I just sent something that may help, if not I will get it scanned and sent. My scanner is not working. I have a new printer and will set it up and scan but you won't have anything until tomorrow. In the mean time can you give me some kind of information?

He gave up a good career to do this because they insisted he be there to oversee things. To date the company has billed 2.7 million and we still have jobs open. However, the working crew and the contacts go with us and how can they just, without notice cut off employees insurances?
Expert:  Zachary replied 10 months ago.
In general, as a member of an LLC with an operating agreement, your rights are completely defined by that operating agreement. So, in this case, where there is a dispute amongst the member, your main recourse will be suing the other members for breach of contract. However, in order to determine what exactly they have done wrong, we need to look at the contract to determine if they have actually broken any of their duties.

If you were to provide the work under the arrangement and you stop the work because you don't like the deal, then you could actually become liable for breach of contract to the other members. Your only recourse at that point would be to continue work and seek a buy out by the other members. However, you probably can't simply stop working.

My understanding of your issues here are that you had originally agreed to a 50 percent stake, but the documents which you signed provided that you only had a 33 percent stake, given that the other partner was going to come in on the deal. Youre going to be stuck with that share because you signed the documents. So, since you are not happy, you will likely need to ask the other members to buy you out and follow the buy out guidelines under the contract, or buy out the member who started screaming at you.

In regard to the fact that you husband gave up his career, this really is a situation where he should have read what he was signing to make sure that he was making the right decision. Most contracts like this are written so that you are not able to bring in any evidence of what you "thought" the deal was, the deal is only as it is stated on the actual agreement.

I'll wait for your document to come through. If you can't get it scanned and emailed until tomorrow, that's not a problem. I'll get back to you when I receive and review the documents.

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