About David K. Staub Expertise I am a business and tax attorney and have spent more than 30 years assisting people with contracts in a wide variety of business situations. I can answer questions about basic contract issues. My experience includes almost all common contracts including employment agreements, contracts for the purchase and sale of a business, shareholder agreements, partnership agreements, LLC operating agreements, leases, software development agreements, distribution agreements, franchise agreements, joint venture agreements and software license agreements, to name a few. I can also direct people to sources for answers to specific legal questions which cannot be answered in a forum of this nature.
Experience
Experience in the area I have been an Illinois business attorney for almost 30 years. I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.
Organizations Illinois State Bar Association;
Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Glenkirk Foundation (Trustee; Vice-Chairman/Strategic Planning); Association for Corporate Growth, Chicago Chapter; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi - President
Publications Commerce Magazine; YLS Journal; ISBA Section of Taxation Newsletter
Education/Credentials Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974
Disclaimer Responses are intended to be informational only. No response is intended to constitute legal advice or create an attorney-client relationship. Online advice is not a substitute for consultation with an attorney.
Question My friend believes he is a part owner in a bike shop because of a verbal agreement between him and the owner of the business. The owner of the business verbally agreed to give my friend a percent of the business if my friend payed a portion of the overhead costs. My friend had paid 100% of the rent and utilities for this business. Is he now legally & contractually a part owner of the business? When the owner signed and deposited my friends checks, did that automatically make him a partner???
Answer There can certainly be a partnership based solely on a verbal agreement. There is no requirement that a partnership have a written agreement.
From your brief description (which is obviously only from your friend's point of view), it does sound like a partnership was formed. But the partnership would be based on the agreement of the parties, not on paying the rent or utilities. In the absence of an agreement to the contrary, those payments could just as easily be construed as a loan or a gift. The fact that the owner signed and deposited your friend's checks, certainly did not "automatically make him a partner." Only an agreement between the parties can do that.
The problem with any verbal agreement is proof. If your friend has no written document and no credible third party with first hand knowledge who can testify in his favor, the burden of proving that a partnership exists may be very difficult. He may well have the facts in his favor to support the creation of a partnership, but he also needs an ability to prove those facts.
He should leave nothing to chance. He should get it in writing.
