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Is an oral contract binding in New York State between two people, domestic partners in business together?

Ossining, NY |

1. We are domestic partners.
2. I was asked by her "Do you want to start a business with me?" I said, "Yes."
3. I put money into the business and I worked for free for six months for the benefit of the business.
4. She is the owner of the business. I could not own the business at the time due to the nature of the business and me being a felon (class E, non-violent).
5. Even the name of the corporation is our initials.
6. The idea for the business, even the name of the business were my ideas. Every person who has dealt with the business has assumed so.
7. I eventually was hired as an "employee" then fired by her.

Attorney Answers 4

Posted

You have a difficult argument to make. Contact a contract/business attorney. The only significance of your being a domestic partner is to fulfill the special relationship requirement in arguing unjust enrichment.

If you found this "helpful" or "best answer," please click it with my appreciation. My response is for educational purposes and does not constitute legal advice nor creates an attorney client relationship which requires all the details and a personal conference.

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1 comment

Asker

Posted

As there was a home involved in which I made substantial contributions to in sweat equity, renovations, and other financial assistance, and which she is keeping, I believe unjust enrichment is the most likely argument.

Posted

The Statute of Frauds requires a contract for more than $500 to be in writing. Yo may be able to argue that it is "unjust enrichment" if you went into the venture with "clean hands" which is in question since you tried to hide your conviction by putting it in her name.

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3 comments

Asker

Posted

There was no sale of goods for $500. She didn't sell me anything and vice versa. And yes there was unjust enrichment. How about constructive trust?

Asker

Posted

Perhaps she was trying to hide my conviction as well since she was aware of it and it was her idea that I hide it.

John J. Carney

John J. Carney

Posted

The judge could use "equity" to rule in your favor.

Posted

Check out this link to New York Partnership Law. It will give you an idea about how partnership is proven:
http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$PTR11$$@TXPTR011+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=40964429+&TARGET=VIEW

The author of this posting is a lawyer licensed to practice law in the State of New York. He specializes in litigation matters relating to personal injury, construction accidents, auto accidents, slip and fall, dog bite, contract litigation, property litigation, civil rights, ERISA, and Social Security matters in federal, state and local courts, with a focus on courts in Staten Island, Manhattan, Brooklyn, Queens and the Bronx. This posting is intended as general information only, is not provided as legal advice in connection with any specific case, and should not be construed to create an attorney-client relationship. For more information about me, see http://www.avvo.com/attorneys/10314-ny-gaetano-parrinello-1897122.html?ref=header

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1 comment

Asker

Posted

That didn't tell me much.

Posted

An oral contract is just as binding as a written contract, but this certainly doesn't end the matter. Legally the contract may be binding but an oral agreement with no witness and no voice recording can end up being problematic in terms of evidence. But again that is a question of evidence and not of law. Once of the attorneys who responded stated that you lack clean hands because you hid your ownership of the business. I'm not sure why that would indicate that you have unclean hands. There's not enough information here really to do a complete analysis. You say you worked for free. Did you agree to work for free or was this sweat equity that by agreement was supposed to translate into an equity share?

This answer is merely an answer to a general legal question and does not constitute any attempt to set up an attorney/ client relationship. I do not advise you to act solely on the basis of this or any other answer to a general legal question because every legal situation is unique and must be studied uniquely.

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7 comments

Asker

Posted

She new I was working for free to benefit the business as it was in start up stage. She new of my past record too so we both have unclean hands

Dan Reed Halper

Dan Reed Halper

Posted

Well I think you are adapting what Mr. Carney said and I'm not so sure he's right that this has anything to do with 'unclean hands' . A party in a contract with 'unclean hands' has nothing to do with being convicted of a criminal act. Rather having 'clean hands' is a requirement of an equitable (as opposed to a legal) defense. Maybe Mr. Carney could elaborate on why he thinks this applies because that aspect of his answer somewhat bewilders me.

Asker

Posted

Remember, we were domestic partners. It's not as if she said, "Hey, I want to start a business, will you help me?" I had just had two major surgeries and wasn't working. Why would I start a business that wouldn't benefit me more then working there as a paid employee for 18 months just to be fired, and then she had me arrested.

Dan Reed Halper

Dan Reed Halper

Posted

Either you guys had a binding agreement with consideration or you didn't. Asking these hypothetical questions has no legal bearing. There are many reasons why people help people start businesses with no remuneration expected. Look at kickstarter.com other than a Tshirt or an honorable mention the thousands of investors in kickstarter projects get nothing in return certainly not equity. It doesn't matter what you did for the business if there was no agreement that you were to get anything. On the other hand, if you did have an agreement, it certainly DOES NOT have to be in writing. What would have had to happen was a 'meeting of the minds' -- ie that you two agreed that you would both be owners of the business, and an exchange of consideration which in this case would be easily satisfied by the work your provided. However, you don't seem to be 100% clear that there was a meeting of the minds. > -- The contents of the communication laid out above is absolutely not a binding offer of any agreement nor an acceptance of any offer. The same is true for any attachment of this email. Any discussion of any agreement will not be binding unless signed with live signatures and notarized by a licensed notary public

Asker

Posted

With Kickstarter people don't expect more than a T-Shirt. The agreement was that we were going into business together. That we were starting a business together. The 'meeting of the minds' occurred every day, every night in bed. We did what we had to do to get this business started including point #4, not because we wanted to, but because we had to. Did we say, "OK you get this from the business and I get that?" Most likely not. We were partners, in life and in business, we both expected to gain from the business, and we both figured we'd eventually sell the business and reap the rewards.

Dan Reed Halper

Dan Reed Halper

Posted

Was there any discussion of the split? When you say there was a meeting of the minds, I assume that you mean that you both agreed to be partners. But not all partnerships have a 50/50 split. Many partnerships are set up where partners have separate capital accounts of different sizes. So did you two agree verbally and explicitly on a 50/50 partnership split? > -- The contents of the communication laid out above is absolutely not a binding offer of any agreement nor an acceptance of any offer. The same is true for any attachment of this email. Any discussion of any agreement will not be binding unless signed with live signatures and notarized by a licensed notary public

Asker

Posted

I'm not saying it was 50/50, I'm saying that we went into this together. Of course I could not be on any documents due to my past record. We verbally agreed to start the business together and work at the business together. I put over $6000 into the business and my partner was fully aware that I was doing so as a partner.

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