What to do if my business partner used his personal credit card to pay for business expenses and then quit the business?

UPDATED: Feb 10, 2014

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What to do if my business partner used his personal credit card to pay for business expenses and then quit the business?

We have no paperwork, contracts, agreements or anything on paper at all. Nothing saying that I (or the business) would take over his debt. Do I have a legal obligation to pay my ex-business partner’s debt that he incurred while in the business? Or no, since he left and quit and any investment into a business is a risk?

Asked on February 10, 2014 under Business Law, Texas


Brook Miscoski / Hurr Law Office PC

Answered 8 years ago | Contributor

It's interesting that there is a smattering of similar questions asked on the same topic on the same day. Of course, nothing in these answers is legal advice, it's just educational material. It sounds like what you have is called a general partnership. In a normal partnership (normal meaning one with good bookkeeping), you would have tracked contributions to the business for each partner, would have some rules about what happens when a partner leaves, and would have the ability to determine the value of the withdrawn partner's interest for purposes of redeeming the interest. 

It's understandable that you feel abandoned and like the departing partner should just lump it since it was a pretty loose arrangement and he's the one who's giving up. The more technical legal answer is that when a partner leaves a business he's usually entitled to recieve the value of his interest in the business (which might not be anything at all, if the business isn't worth anything at all), but the circumstances of his departure can affect what and when he's owed.

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.

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