Business agreement

[Ella Besanth]

My friend and I have planned to set up a business with investment of 50/50 percent. We even finalized on a business premises and have already paid for it. Now my friend wants to withdraw from business because of his personal reasons.
As I alone cannot bear all the cost incurred in setting up of business, I tried to explain him the same. He says that he needs the money for something more important. He now want s the money. I do not know what to do? Please suggest.

[R0b]

Hello

I'm afraid we can't tell you what to do, that is up to you to decide.

It's not clear how the money is being invested, you say 50/50 but then go on to say that he now wants the money.. that doesn't make sense to me unless source of income is coming from a bank.

You've not mentioned anything about the business structure e.g. a limited company, partnership etc. In the absence of anything specific, it may be that based on the facts, you may have both formed a partnership under the Partnership Act 1890. It is a contract formed by two or more people with the intention of setting up a business and view to sharing the profits.

Partners have unlimited liability and they are also joint and severable, meaning creditors can persue one of you or both, entirely at their own discretion. Your friend would be liable for debts up to the point he left but you could recover from him any losses incurred as a result.

I would suggest you look at getting some independent legal advice because I don't think your situation is straightforward.