Partner quits project, agrees 2 termination agrement, transferring profit share rights 2 me without compensation. Enforceable?
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Partner quits project, agrees 2 termination agrement, transferring profit share rights 2 me without compensation. Enforceable?
I have been working on a project with my business partner. We got a lot of work done but, suddenly and voluntarily, he quit the project. He gave me all the work/materials and told me that he didn’t want any credit nor monetary compensation. We signed a 2 page agreement, before starting the project, where we agreed to partner for this project only. The deal memo says that he would get a of the profits and that we would split all the costs incurred, such as traveling expenses, hiring other people sporadically, etc. We actually had several expenses but he doesn’t want any reimbursement either. Since this isn’t a registered LLC, and we started collaborating after just partnering as individuals, what would be the best way to dissolve and terminate our partnership? He agrees to sign a termination agreement that says that he is transferring all his shares of the profit and rights to me without any compensation. Would that be an enforceable termination agreement?
Asked on February 20, 2017 under Business Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
In a situation like the one you describe, where there is no LLC or corporation to be dissolved and/or whose ownership must be resolved, a simple written contract, clearly delineating what each of you is giving up (e.g. rights to profit or reimbursement) and getting (you have to give him something, called "consideration," in exchange for what he is giving you to make the agreement enforceable, but it can be as simple as promising in the agreement that he will have no further obligations to you and that you will not sue him for anything he did while a partner) and signed by the two of you will suffice and be enforceable. Simply write up the terms clearly, make sure you both agree to them, and both sign.
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