Can I recover my equipment investment plus interest?

UPDATED: Oct 1, 2022

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Can I recover my equipment investment plus interest?

I entered a verbal partnership with a local business owner almost 2 years ago to bring coffee to her specialty food store. I drafted a partnership agreement that we were supposed to collaborate over and edit but this never happened. My responsibility was just the coffee, although I did many other things around the shop including running it several times by myself and even installing a hand-washing sink in the basement. I invested my personal money into the coffee making equipment and first several months inventory as a gesture of good-will. I also agreed to have my share of the coffee profits reinvested into the business after my investment was paid-off. I separated from the business in January 2018 because my wife and I had a baby in August 2017. I travel exactly half the year for my full-time job and could no longer justify spending my precious time-off at the store, away from my son. The store’s owner agreed with this and also stated that she wanted to keep the coffee equipment. Upon my separation, I still had received 0 in repayment on my investment. I agreed to take groceries as part of repayment on this equipment. Currently, I have received just over $2000 in groceries and 0 in cash. I decided that I cannot take any more groceries as payment because the business owner has made no attempt at reimbursing me in cash. The equipment is still in use making the business money, except for a grinder that was broken after I separated. I have sent an email to the business owner stating that I want my money and am even willing to take it in payments. The response to my email has left me concerned that I will not receive a full reimbursement. What can I do to recover my investment?

Asked on September 27, 2018 under Business Law, Iowa


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

First, you can NEVER get interest unless there was a written agreement giving you interest.
Second, if you put your money into the equipment as an "investment" as you say, there is no right to get it or its value back if you choose to leave the business. An investment into a business gives you a profit participation in the business and a share of it, which you can profit from if the business is sold at a profit, but it is not like a loan--there is no guaranty of repayment. 
Third, you chose to re-invest your profits into the business: you did not have to, but could have taken your profits instead. By choosing to re-invest them you do not have right to them now.
So you have no right to return of the equipment or repayment or to interest.  The best you can do is enforce the terms of the agreement you apparetly made with the other owner for your separation from the business: i.e. in return for giving up your interest in the business, you presumably agreed (based on what you write) to receive $X in grocercies ("I agreed to take groceries as part of payment) and $Y (the other part of payment) in cash. That agreement is the only enforceable source of rights you would have at this point. So whatever they agreed to pay you but have not to date, you could sue for; be warned, however that if it was an oral (unwritten; that, not "verbal," is the correct  term) agreement, proving it existed and proving what its terms were may be difficult. It may be hard for you to prove what you are entitled to.
In the future, put EVERYTHING in writing from the state, well spelled out in detail, so you know and can prove exactly what you are entitled to, when.

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 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.

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