What to do if my business partner used his personal credit card to pay for business expenses and then quit the business?
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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
Answers:
Brook Miscoski / Hurr Law Office PC
Answered 10 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have some rules about what happens when a partner leaves, and would have the ability to determine the value of the withdrawn partner's interest for purposes of redeeming the interest.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.
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