Results 1 to 8 of 8
  1. #1
    Join Date
    Aug 2010
    Location
    Harteville
    Posts
    45

    Unhappy Business Partner Wants Investment Repaid and to Exit the Business

    My question involves small claims court in the state of: Ohio.

    I am being anger sued by my lifelong friend Mike.

    I have 3 questions.
    My friend Mike and I started a business selling woodcrafts on an online craft site. When we started out there was$900 in startup cost. I was broke and my credit was shot. He was broke but was able to pay for all the supplies at home depot on his credit card. So left there & went to my house that day with all the supplies to start crafting. We used my house because I had all the best woodworking tools and space. The agreement at this point was that I would pay him back my share of the $900 startup cost ($450).

    BUT!!! Right away In the beginning I found myself alone doing all the hands on crafts myself & he at no point made himself available to do his part of the labor. I created several unique crafts, some ideas were borrowed from various websites that I researched & some were original. I completed enough product that would yield double our investment once sold all on my own. I also bought some minor loose end components costing $40. I used my idea, my equip, my electricity, my time. The custom designs alone are my intellectual property.

    Then I set up an Ebay website product store which took a little time. I proceeded to list all 53 products; I had to do multi angled photographing of the products in a makeshift studio which took a few days. Then I had to research and come up with all the creative romance text and specs of each woodcraft item, this too took a considerable amount of time to do. I used my computer, my internet, my electricity, my time.

    At this point my buddy Mike decided he wants out and wants his money back, no more, no less, $900 even Steven. I told him that I did not have it & that he will have to wait until the profits come rolling in. Well the profits did not come rolling in. I was disappointed. Only 7 items sold & its been over a year. I gave it my all.

    So I calculated all the listing fees & sold item fees that Ebay pounds upon you. Then I calculated all the shipping & handling, boxes and packing material as well. I also spent money on advertising. I came up with $179 in the account to which I split & wrote Mike a check for his half but he was not good with that.

    I plan on waiting and adjusting prices to sell the rest of the products until he gets his money & I get paid for my time. But when i try to talk to Mike about this, he just yells at me, cusses and demands his money. He does not think I should get compensated for my time and effort. I spent weeks upon weeks in my garage fabricating all these great products for pour business and he bails on me then sues me in court for $900 plus his credit card interest & court cost.

    I hate losing a friend but I hate losing money more. I need to live too.

    1. Do I have a right to get paid for my time?
    2. How do you think the small claims court judge will handle this case?
    3. Do i have to pay his court cost and credit card interest?

    one more question...Is mike considered and investor or partner & does that make a difference in court?

    Any insight on this matter would be helpful.
    Peace & Love,
    Arlo

  2. #2
    Join Date
    Nov 2013
    Location
    in alto mare
    Posts
    1,123

    Default Re: I Am Being Anger Sued by My Lifelong Friend Mike

    I would have paid back the half he loaned you in full, since that was your initial agreement.

    The actions you took to make, list and sell the items were all on you.

    Once you've paid him off, perhaps end your partnership and make and sell the items yourself if he's not consistent with helping you.

    See if he'll take his half now and drop the suit.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    Quote Quoting arlo
    View Post
    My friend Mike and I started a business selling woodcrafts on an online craft site. When we started out there was$900 in startup cost.... The agreement at this point was that I would pay him back my share of the $900 startup cost ($450).
    Is any of this in writing?
    Quote Quoting arlo
    BUT!!! Right away In the beginning I found myself alone doing all the hands on crafts myself & he at no point made himself available to do his part of the labor.
    You told us that he fronted the money. You have not shared with us any commitment by him to additionally provide labor. Again, is any of this in writing?
    Quote Quoting arlo
    I created several unique crafts, some ideas were borrowed... I completed enough product that would yield double our investment once sold all on my own.... Then I set up an Ebay website product store which took a little time. I proceeded to list all 53 products....
    All of that is what one would expect from somebody who is designing and manufacturing crafts to sell online; save perhaps for their also using Etsy as a source of potential sales.
    Quote Quoting arlo
    At this point my buddy Mike decided he wants out and wants his money back, no more, no less, $900 even Steven.
    Based upon what you have told us that you believed at the time, that would have been a very good deal for you. You have implied that you agreed to buy him out for the $900 -- the $450 you borrowed plus the $450 he invested. Is that in fact what you agreed to do?
    Quote Quoting arlo
    I told him that I did not have it & that he will have to wait until the profits come rolling in. Well the profits did not come rolling in. I was disappointed. Only 7 items sold & its been over a year. I gave it my all.
    You're clearly not supporting yourself with this business venture, so it would make sense for you to apply some of your revenue from your day job to the apparent buy-out agreement.
    Quote Quoting arlo
    I came up with $179 in the account to which I split & wrote Mike a check for his half but he was not good with that.
    If you promised to buy him out, then that would not be consistent with your promise. Further, whatever the agreement, it would not be unreasonable for him to want you to repay the money you borrowed prior to taking profits for yourself.
    Quote Quoting arlo
    I spent weeks upon weeks in my garage fabricating all these great products for pour business and he bails on me then sues me in court for $900 plus his credit card interest & court cost.
    If you in fact agreed to buy him out, you should expect that he'll prevail on that $900 claim, and that he'll recover court costs. He may be able to recover pre-judgment interest on the loan depending on the full facts, but it won't be based on his credit card interest rate.
    Quote Quoting arlo
    Do I have a right to get paid for my time?
    Your time has absolutely nothing to do with the division of profits, and it has absolutely nothing to do with a buyout agreement if you in fact agreed to repay him the full $900 with his exiting from the business.
    Quote Quoting arlo
    How do you think the small claims court judge will handle this case?
    That will depend on what your actual agreements entailed, what is and is not disputed in court, and what evidence is submitted for review by the court.
    Quote Quoting arlo
    Do i have to pay his court cost and credit card interest?
    If he prevails, he will be awarded taxable costs -- typically filing fees and service fees. I've already addressed interest.
    Quote Quoting arlo
    Is mike considered and investor or partner & does that make a difference in court?
    You have told us that initially he was investor, but that may have been changed by your subsequent agreements -- and it may be difficult to prove depending on what is or is not in writing. We don't have enough facts about your agreements with him to tell you how a court might interpret your agreements and respective obligations.

  4. #4
    Join Date
    Aug 2010
    Location
    Harteville
    Posts
    45

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    to Mr. Knowitall. Thank you for your insight. this helps a lot.

    There is nothing in writing, howver there may be some text messages here and there talking about the business but no actual contract. We were in this together 50/50 and I have a witness that heard Mike say that part. Its just that I did not have my half of the money during startup. I have no additional income right now other than odd jobs. I live off from my parents house and pay no rent. I plan on trying out Etsy next but was going to wait until the judge makes a decision.

    The only reason I did all the work is because Mike failed to do his part & I had more time than him. I just wanted this thing to succeed. I did not intend for him to lose any money & I did not expect to work for nothing either, or I would have been the one who bailed.

    The point that he bailed on me was around the time most of the crafts were cutout & half of them were painted.
    He just said he wanted his money back & I never really agreed to do that. I told him to just wait until we start selling some things and see how things go. There was no set time limit on any of this. Im just glad he had no control of teh website where he could divert all payments to his account.

  5. #5
    Join Date
    Nov 2013
    Location
    in alto mare
    Posts
    1,123

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    I missed the part about the buyout offer. Again, you need to pay him what you owe him and eat your labor costs. You can't expect him to absorb your labor costs.

  6. #6
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    Quote Quoting arlo
    View Post
    He just said he wanted his money back & I never really agreed to do that. I told him to just wait until we start selling some things and see how things go.
    If the conversation went along the lines of this:

    Him: I want my full $900 back.

    You: You'll have to wait until we start selling some things because I don't have the money right now.

    That's reasonably interpreted as your agreeing to repay him the full $900.

  7. #7
    Join Date
    Dec 2008
    Posts
    629

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    Quote Quoting arlo
    View Post
    The only reason I did all the work is because Mike failed to do his part & I had more time than him. I just wanted this thing to succeed. I did not intend for him to lose any money & I did not expect to work for nothing either, or I would have been the one who bailed.
    Since this was supposed to be a 50/50 enterprise, if you had not done any of the work on your own and waited for Mike to show up to work then when he bailed you could have just given him his stuff back and tell him to return it then. But since you made the decision to start working on the items they are no longer returnable.
    You did not work for nothing, you took a bunch of raw materials and turned them into finished products with a value of "X". So what you earned from your work is X - $900.
    If you ask any small business owner if they took a paycheck from their first sales their answer will probably be NO. I don't remember the numbers but I recall seeing something about starting a small business that said you should be able to live for a certain number of months without any income from the business as all your initial sales money will be taken by startup costs.

    Since you have no income have you offered him half of the finished product to sell as he sees fit to recover his initial investment? Seeing as how the sales are going so far I'm sure he'll decline this offer but it may help you when you go to court to be able to tell the judge that you did offer him half of the business property to settle the debt and he declined.

    Do whatever you can to avoid going to court over this as you can potentially lose a lot more than $900 if he wins his argument.

    Consider this money spent on life's tuition and caulk it up to a learning experience, next time you'll get it in writing as far as who/what/when.

  8. #8
    Join Date
    Aug 2010
    Location
    Harteville
    Posts
    45

    Default Re: Business Partner Wants Investment Repaid and to Exit the Business

    this issue was resolved finally by me telling Mike to take a flying leap & so he did. His attorney must have told him he was cray cray and to cut his losses.

    1. Sponsored Links
       

Similar Threads

  1. Business Ownership: What to Do About a Business Partner Who is Harming the Business
    By TattooTroubles in forum Business Law
    Replies: 4
    Last Post: 11-04-2013, 04:04 PM
  2. Business Finance: Business Partner's Spouse Liquidated the Business After He Died
    By st-johns-river in forum Business Law
    Replies: 2
    Last Post: 05-19-2013, 12:27 PM
  3. Business Issues: Failed Business Exit Strategy
    By Patriot88 in forum Business Law
    Replies: 1
    Last Post: 01-12-2013, 10:12 AM
  4. Starting a Business: Business Law for Business Partner Who is Not an USA Citizen
    By apartsteve in forum Business Law
    Replies: 1
    Last Post: 08-04-2012, 07:07 PM
  5. Business Finance: Business Partner Took Start-Up Money, Didn't Start the Business
    By thetruth32 in forum Business Law
    Replies: 1
    Last Post: 06-23-2012, 06:05 PM
 
 
Sponsored Links

Legal Help, Information and Resources