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JGM
JGM, Solicitor
Category: UK Law
Satisfied Customers: 11551
Experience:  30 years as a practising solicitor.
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I made a verbal agreement to be a partner in a business

Customer Question

Hi
I made a verbal agreement to be a partner in a business I put half the monies into setting up the business. I have worked for 12 months along side my partner but now she no longer wants to continue working together.
My name is ***** ***** at all.
where do I stand
Submitted: 2 years ago.
Category: UK Law
Expert:  JGM replied 2 years ago.
Thank you for your question.
You have to compare the amount that you put into the business with what your capital account in the business is worth. Under the Partnership Act what you have is a partnership at will. In the absence of a written agreement saying otherwise, you are entitled to half of the value of the partnership. In general terms that would be calculated by taking the capital you put in, adding to it a half share of profits and deducting your drawings from the business. The sum remaining is your capital account in the business and that is what you should be paid on your ceasing to be a partner.
The fact that everything is in your partner's name is ***** ***** material as it can be taken that she holds everything in trust for the partnership.
I am assuming for present purposes that there is no dispute from the other party that you are a partner in th business.
Happy to discuss further.
I hope this helps.
Please remember to leave a positive rating so that I am credited for my time.
Customer: replied 2 years ago.

Hi

Thank you for your response. My partner was happy for the business to go in her as I have another business interest and she could of been affected by this in terms of me being vat registered.

I had spoken about putting everything on paper with a solicitor, but she said that wasn't needed..

I put £4500 into the salon to open it. We have taken just over £22000 in the first yr of trading. The rent is £406 per month and the other bills are £400 per month.

We started taking £100 per wk each from Jan this year. So where do I stand??

Expert:  JGM replied 2 years ago.
There is a profit of £12328 on your figures of which your share is half so £6164. Add that to your capital introduced of £4500 is £10664. Take away your drawings of £100 per week since January, say a total of £2700 and your capital account would be worth £7964.
Customer: replied 2 years ago.

If my business partner offers me only what money i put into the business to start with and I agree, but later find out I am intitled to a goodwill gesture, can I then say I want more. No money has exchanged hands yet.

Expert:  JGM replied 2 years ago.
You are not entitled to any value by way of goodwill as there is no partnership agreement dealing with goodwill. Your payment on retiral is that along th lines calculated by me. It is for your to decide whether to claim that or not but generally you would enter into a dissolution agreement the terms of which would govern the dissolution on a full and final settlement basis.
So no, you have to decide now what you want to happen.
Customer: replied 2 years ago.

Is all this advice emailed to me as I haven't had anything come through.

Expert:  JGM replied 2 years ago.
I don't know, you would have to email customer services.
Customer: replied 2 years ago.

Can she changes the locks on the premises, without any deal being done.

Expert:  JGM replied 2 years ago.
Not while you are a partner, no.