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MDLaw, Attorney
Category: Business Law
Satisfied Customers: 6135
Experience:  Experience in business law, contract law and related matters.
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My question regards XXXXX XXXXX loan made to a friend (which

Customer Question

My question regards XXXXX XXXXX loan made to a friend (which I was taught to never do). My friend owns an entertainment company. He recently had an event in which I was a sponsor. The event rolled around and he was short on money. He didn't know what to do so I took out a high-interest loan and we discussed and agreed that it would be paid back immediately after the event. Well, naturally, I was avoided for several days until I got in touch with him.

Backing up a bit, before I made the loan, he said that I needed to speak with his partner Shane (another friend). I inquired about partnership, and I was told that yes, Shane was working with Mike (the friend who received the loan). That's as far as the discussion went. I was told to wait a day or so to make sure that the event would even go through. It did, and I paid Mike (not discussion was ever pursued about Shane's role other than he was helping Mike).

Now, Mike claims that I need to approach Shane for the money as well as they are "business partners" (this is the first that I have heard of this). I was informed of the name of their partnership (which never was brought up during the discussion about the loan). Thus, I was instructed that I made a loan to the partnership (which I didn't even know existed) which is titled Event Brother's.

I made a personal loan to Mike. It was with the knowledge that he needed it for the event, but I loaned the money on Mike's behalf to do whatever was needed with it. Personally, I hated to see the event crash after having been a sponsor (in which I do not receive compensation). But, he is now saying the he and Shane are too broke to repay, the loan was made to them, and they will pay when they can pay. It's a debt so all I can do is wait for my money or send them a bill.... that's what I was told. As far as I'm concerned, there is no "them" to it. The money was borrowed on MIke's behalf, and given to him.

Where do I truly stand with this???


Tommy Bowers
Submitted: 4 years ago.
Category: Business Law
Expert:  MDLaw replied 4 years ago.

Hello and thank you for using the Just Answer website. I look forward to assisting you.


Just so that we are on the same page, what legal information are you seeking, exactly? In other words, what is your legal question? Are you asking who it is that you need to sue to recover the money?



Customer: replied 4 years ago.

Yes, that is correct. Since nothing was signed, and suddenly a partnership, rather than the person, was supposedly the recipient, I don't know where the law kicks in here.

Expert:  MDLaw replied 4 years ago.

If there was no paperwork, then it would be the person that you loaned the money to that you would need to sue to recover the monies. If you want to cover all of your bases, you can also name his business as a defendant as well since he did tell you that the loan was for the business.


Please let me know if this has answered your question or whether you need any clarification.

Customer: replied 4 years ago.

The business is what he is using to hide behind. He hit me with that one a few days ago. In such a case, the loan would have been made to he and his partner. Now he is asking for copies of the paperwork and a bill breaking down the interest cost. Again, this was a personal favor. I explained what the interest cost would be.

Expert:  MDLaw replied 4 years ago.
I'm not sure what you mean when you say he is hiding behind the business. You can sue both him and the business.
Customer: replied 4 years ago.

He knows the loan was made to him. He can't pay it back, so he is bringing the "business" (that I knew nothing about) into the equation. Therefore, he can state that it was a loan to the business, not a personal loan, and that his partner(s) are accountable as well. That's not the case. I didn't loan to them, but he swears I did, and we have no paperwork....


He is stating that since it is a debt, I can send a bill to the partnership and it will go into collections. Much more complicated to sue the partnership as the logistics change; the partnership's procedure is to receive a breakdown of the interest cost, and several other factors. I was simply trying to help a friend in need....and it has blown up in my face...


Expert:  MDLaw replied 4 years ago.

I'm not sure what it is that you are asking for clarification on. If the loan was to him, you would sue him. However, you already know that he is going to use as a defense that the loan was made to the business and not him, personally. There is no paperwork and so it will be your evidence against his. Therefore, to cover yourself, you want to sue both him and the partnership and then the court will look at the evidence and determine whether there was a loan (versus a gift or an investment) and determine who owes it.



Customer: replied 4 years ago.
Relist: Other.
We couldn't seem to get on the same page. She kept stating that she didn't know what I was asking. And to clarify. I did. Clear as a bell
Expert:  Dave Kennett replied 4 years ago.
If you gave the money to your friend as a loan then your contract is with him and not the partner or the partnership. since there is nothing in writing it is simply an oral contract for a personal loan. Assuming you can prove the money was transferred to your friend then you should have no problem winning the case. if the amount is small enough you can sue in the small claims court without the need for an attorney and the court should have the correct forms available for your use. There's no point in suing the partner if he was not part of the original agreement but if you want to name him as a defendant you can do so. This sounds like a simple loan from you to your friend and the purpose of the loan is irrelevant to whether it is owed by your friend.
Expert:  MDLaw replied 4 years ago.

Mr. Kennett has repeated exactly what I told you. I think there may have been some miscommunication. Your question was whom do you sue. My answer to you, which Dave Kennett agreed with, is that you would sue the person to whom you gave the money to. However, if you already know that he is going to argue that you loaned the money to the business, you can simply add them on as defendants. I think you are making it more complicated than necessary. It is a simple contract case. The loan is the contract and him not paying you back is the breach.