Can someone demand that I owe them money if we were in a 50-50 partnership?

We bought a cottage to fix up with 2 other people. It was agreed upon in the very beginning that everything would be split 50-50 cost-wise. And in the end that we would sell at a 50-50 split. However, 1 year after we purchased the property and 6 months after we finished working on the property, a problem arose. Our business partner decided that he worked harder on the property then we did and now that we are going to sell, he wants $3,000 more for his time

instead of splitting the profit 50-50 as was agreed to in the beginning. I do not think that we should give them any more money but am I obligated to pay? There were no written nor verbal agreements; it was 6 months after the fact that he decided we did not meet his expectations.

Asked on June 15, 2016 under Business Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If the agreement was a 50-50 split in cost and then later a 50-50 split in profits, that is what he is entitled to--no more and no less. (There is always at least an oral agreement [inaccurately but commonly called a "verbal" agreement]--the oral agreement is what you discussed and agreed to, even if it lacks detail and specificity.) He cannot unilaterally (on his own) amend the agreement to require greater payment to him due to his allegedly greater "sweat equity."
Of course, if he feels strongly enough otherwise, he may sue you--even when someone has a bad or weak case, it's almost impossible to stop them from suing and forcing you to respond to the lawsuit. And suits without a written agreemen are always chancier than ones with, since there is nothing in writing for the court to refer to--it all comes down to who does the court believe, and if he is prepared to testify that there was an agreement that he'd get more due his greater work, it's possible that he could convince a court of that. Rather than face possible litigation and the risk of losing, you may wish to try to settle with him for some lesser amount you can live with paying.


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