Are verbal agreements regarding the ownership of a business enforceable?

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Are verbal agreements regarding the ownership of a business enforceable?

My friend, Hugh, owns a bar, and he entered into a verbal agreement to be partners with a guy named David. No written agreement of partnership was made. The only thing is the liquor license, which has both of their names on it. In 7 months ago, David offered to buy Hugh out of the partnership for $80,000 but never made any payments and this was never in writing. Now the bar is going out of business and David is taking everything out of the bar and refusing to allow Hugh in there to get his property. Is there any legal action, like cops involved, to prevent David from stealing all of the property?

Asked on March 10, 2011 under Business Law, Iowa

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

As I am sure that you know, a written contract is the best source to look to as to the rights and obligations of the parties.  And certain contracts - like for the sale of real property - must be in writing to be enforceable.  But verbal contracts can also be enforced, as long as the elements of contracts and the rights and obligations of the parties can be proven.  What your friend needs to do is to go and see an attorney about filing for an injunction to stop David for dissipating - destroying or taking - assets of the business.  Then he is going to have to sue him and prove that there was an agreement.  Good luck.


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