If he were to ask to remain as a 5% owner, that is possible, but I would not think likely with the return of $1,900 — though a court might reduce the 5% pro rata accounting for a $3,100 investment rather than $5,000.
I agree if he is just looking for the $3,100 that is not likely a bad situation. You may also want to start gathering all evidence of what the agreement was about the company from the start and also any evidence of his demand just to withdraw for return of the $5,000, as one argument you have is that you would not have returned the $1,900 if he was still going to be an owner or argue for more than the additional $3,100 to get out.
Once served (or if you find the information online), if it is just about the $3,100, you should be able to work out a payment plan or deadline for making that payment to get the case resolved without the time and expense of a trial.
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My friend is suing me.
I'm sorry to hear about your situation. Can you tell me more about why your friend is suing you?
We originally bought a company together. He was going to own 5% but after 2 weeks, he just wanted his money back and not to be a part of the business.
Have you been served with any legal documents regarding the lawsuit?
Not yet.
Is there anything else the lawyer should know before I connect you? Rest assured they'll be able to help with your friend suing you.
Yes.
Hello. My name is Wendy and I am an attorney. Though I may not be licensed in your jurisdiction, I am happy to provide information about this situation to help.
Do you have a written agreement related to ownership of this business?
We have a written agreement but we never signed it or finalized it at all.
My friend contributed $5,000 in exchange for a 5% ownership interest in the business. He also agreed to manage business-related eBay sales to earn additional income, which has now been mutually agreed to discontinue.
But after 2 weeks, he got back $1,900 and then just wanted his $3,100 back. I didn’t have it, so he is trying to serve me. Now the company is taking off and he is acting like he owns 5%.
We both seek to formally define his ongoing ownership and rights, and finalize the settlement of all other financial and working obligations.
When you paid the $1,900 was there anything in writing that this was to buy out his interest, or at least part of it, and that the rest would be paid later?
No, it was just a verbal agreement that he wanted out and would forfeit his equity.
“I no longer believe in this company, just give me my money back.”
And, he accepted the $1,900 partial payment already?
Yes.
And, what is he suing you for (e.g., to keep his ownership, for the $3,100, or for the $25,000 buyout)?
But then I couldn’t pay back the $3,100, so he blocked me and filed suit.
What is the lawsuit asking for?
Haven’t been served yet, but I’m assuming $3,500. Which is no concern.
I guess I’m just asking if he has a chance of owning the 5% even though I never signed papers and started paying him back.
If he were to ask to remain as a 5% owner, that is possible, but I would not think likely with the return of $1,900 — though a court might reduce the 5% pro rata accounting for a $3,100 investment rather than $5,000.
I agree if he is just looking for the $3,100 that is not likely a bad situation. You may also want to start gathering all evidence of what the agreement was about the company from the start and also any evidence of his demand just to withdraw for return of the $5,000, as one argument you have is that you would not have returned the $1,900 if he was still going to be an owner or argue for more than the additional $3,100 to get out.
Once served (or if you find the information online), if it is just about the $3,100, you should be able to work out a payment plan or deadline for making that payment to get the case resolved without the time and expense of a trial.
Thank you again for using AskaLawyer. It is my pleasure to assist you, and I hope this information helps.
Please let me know if there is any part of your question I failed to answer. You can also post any follow-up questions you may have and I am happy to answer those as well.
