Business Buy Out

I started a childcare business with a partner almost a year ago. Neither brought any money to the business. We used the parents’ deposits for holding spots to get started. Now she says that owing a business is too stressful for her. Her name is on anything except the lease, which we still owe 7 months on. She gave me her 2 week notice and wants me to ‘buy out’ her part, but we don’t have anything. Do I legally owe her anything since she’s walking out? Does she owe half of the lease since both names are on it?

Asked on January 7, 2018 under Business Law, Mississippi

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) There is no obligation to buy her out unless there was a formal written buyout agreement (or buyout provisions in some other document, like an LLC operating agreement) requiring a buyout. Otherwise, it is voluntary whether to buy her out or not. You might choose to do so, to sever the relationship cleanly,  but without an agreement requiring this, you would have to agree to buy her out, which means it would have to make sense for you.
2) If she is on the lease she is obligated under it. If she does not pay her share, you could sue her for it.
This suggests that a possible "buy out" might be you taking over her lease obligations in exchange for her giving up all claims to the business.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.