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jdhaas
jdhaas, Attorney
Category: Business Law
Satisfied Customers: 2998
Experience:  23 years of business law experience
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I am buyinga 50%share of a business(auto salvage).The ...

Customer Question

I am buyinga 50%share of a business(auto salvage).The seller is proposingto keep 50% of the existing corporation and sell the remaining 50% without establishing a new corp. which I think would be the safest for me.After one year I am buying out the other 50% of the company.The question is how can I protect myself during that one year being a 50% partner from any liabilities that existing corporation may have.   Waldek.           Lantana, Florida
Submitted: 9 years ago.
Category: Business Law
Expert:  jdhaas replied 9 years ago.
The 50% owner has the legal right to make decisions during the time that he or she is the owner just as you have the legal right to make decisions. Thus, if owner A buys a corporate jet, the corporation has bought the jet. If owner B buys a racehorse, then the corporation has bought a racehorse.

The only way to prevent liabilities is to include that in the purchase agreement and the corporate documents. For example, the purchase agreement could say that all purchases over $1000 require agreement from all shareholders, etc. The same language should be in the bylaws.

Since this is an important issue, a corporate lawyer should review this transaction to protect your rights. You can find them by conducting an internet search or by contacting the referral service of the state bar in the state in which the business is located. Good luck.

I hope that I have helped you, answered all of your questions,
and that I have provided you with useful information.
Please ask more questions if I have not answered all of your
questions.

In the future, if you would like to specifically ask me a question,
you can ask for me in the body of the question.


Please be aware that my answer is not legal advice,
it is merely information. The only way that I am legally
responsible for your legal rights is if you have signed
a written retainer agreement with my law firm.
Customer: replied 9 years ago.
Reply to jdhaas's Post: the question is how to protect myself from the liabilities and obligations and debts if there are any, before I entered the company as a partner not the future liabilities
Expert:  jdhaas replied 9 years ago.
The way to resolve this is through the purchase agreement and by laws. In the purchase agreement you need to insert a clause that says that none of the corporate liabilities are going to be your responsibility, that the seller agrees to pay those upon closing.

If this is a significant investment for you, please consult with a lawyer to protect your interests and to draft this agreement so that it will do what you want it to do. This is an important issue and an attorney is indispensable for this.

I hope that I have helped you, answered all of your questions,
and that I have provided you with useful information.
Please ask more questions if I have not answered all of your
questions.

In the future, if you would like to specifically ask me a question,
you can ask for me in the body of the question.


Please be aware that my answer is not legal advice,
it is merely information. The only way that I am legally
responsible for your legal rights is if you have signed
a written retainer agreement with my law firm.
Customer: replied 9 years ago.
I did not get an answer and I did reply an hour ago, but there is no respond.
Expert:  jdhaas replied 9 years ago.
You asked a question and I answered it. Then you asked about the liabilities before purchase and I answered that. Do you have another question?
Customer: replied 9 years ago.
I know I can not expect a legal advices, but answers you gave me, did not explain or clear out anything, so thank you.
Expert:  jdhaas replied 9 years ago.
The only way for you to buy a company and not assume its debts is by drafting a contract that controls that issue. You will need an attorney to write that unless you are capable of writing that yourself.

I hope that I have helped you, answered all of your questions,
and that I have provided you with useful information.
Please ask more questions if I have not answered all of your
questions.

In the future, if you would like to specifically ask me a question,
you can ask for me in the body of the question.


Please be aware that my answer is not legal advice,
it is merely information. The only way that I am legally
responsible for your legal rights is if you have signed
a written retainer agreement with my law firm.
Customer: replied 9 years ago.
Again, the answers you gave me did not help in any way and are not helpful at all, so I will look for help elswere. Thank you.
Expert:  jdhaas replied 9 years ago.
I am sorry that I could not provide that which you wanted. Good luck.