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1. Person A and B started a company2. To finance

1.      Person A and B...
1.      Person A and B started a company
2.     To finance renovation of the company, Person A took out individual loan and Person B took out individual loan.
3.     Company signed a lease for five years. Person A and B signed as guarantors.
4.     Person B signed over his 50% of the corporation to Person A without asking for any money. Now Person B has 0% interest in the company.
5.     Person B
      a.     Has 0% interest in the company
      b.     Has an individual loan with a bank
      c.     Is one of the guarantors of the lease
6.     Person B wants:
      a.     Person A to take over his individual loan
      b.     Out of the lease as guarantor

Is there any chance for Person B to get any of it?
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Answered in 9 minutes by:
5/15/2008
rvlaw
rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8,387
Experience: NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator
Verified

Hi,

5. a. True....it was a gift, not a sale.

b. True...he signed the loan..nothing has changed as to B and the lender.

c. True...as a personal guarantor, if the corp doesn't pay rent, the landlord can look to either or both guarantors. They are what we call "jointly and severally liable".

6. a and b.......too late. He should have negotiated these and put them in writing with A when he signed over his 50%.

rich

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Customer reply replied 9 years ago
Can we say that it was not a "gift" and that it was a contract (specifically service contract) and there was no "consideration"? The agreement (notarized) said that Person B "voluntarily" gives up all his shares to Person A. And that Person B (the person with 0% interest) will continue to work for the company without pay for 5 months. No mention of any thing given to Person B. Can this contract/agreement be "voided"? Thanks.

You have hit the nail on the head so to speak, The reason it was a gift not a contract is precisely due to lack of consideraion...B gave up his 50 % A gave up nothing. B's working without pay changes nothing...B is giving up even MORE and A continues to give up nothing. NO CONTRACT!

rich

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Customer reply replied 9 years ago
Hi Rich,

Is it possible to take back the gift? It is recent and nothing has been documented (filed with the state or written on the company's record)? I know, grabbing at straws, but it seems like such an injustice for someone to give up a lot (upwards of $60,000) and get nothing for it. I'm trying to help him find some sort of remedy. He thought that by giving up his shares he wouldn't be responsible for the loan or the lease since he would be out of the company. Thanks.

PS: I will definitely pay for your service. I will be heading out for work and won't be able to check my email until I get back.

Hi,

He can't take it back. It's a gift. A can give it back though.

State filings or company records even if required don't change the validity of the transfer.

B should have addressed the loan/lease issues. But he could have only bound him and A NOT THE LANDLORD OR LENDER. They could always have gone after B directly..see above...joint and several liability. Then at best B could have held A liable to B.......if they had agreed to that.

B should have had legal counsel.

Rich

rvlaw
rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8,387
Experience: NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator
Verified
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rvlaw
rvlaw
rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8,387
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Experience: NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator

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