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What happens if a founder company separation agreement is negotiated and only party signs it and the other refuses to sign?

New York, NY |

2 Founders started company, separated after few months and agreed on a split. The continuing founder has the separation agreement executed by the departing founder but refuses to countersign. This is done partly as she wants to dilute the departing founder down to zero by transferring the assets of the existing company to new company. She is hoping that if the departing founder sues and wins, then the total due to the departing founder is capped by the agreement, while she gets a free option to squeeze the departing founder down.

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Attorney answers 4

Posted

The answer depends on whether the agreement satisfies the Statute of Frauds. An attorney can answer your question after a formal review of your agreement.

You would be well-served to discuss your dilemma with a New York business law attorney in a confidential forum as soon as possible.

Posted

If a written agreement is not signed, it is not valid. You can't just have one party sign and not the other required party and then also expect that you can demand compliance with what was not signed. This person cannot also just wait years and then,, when it is right for them, then sign and claim that the other party is bound to the terms. An agreement must be accepted in a reasonable time or in the time required in the contract.

As noted by my colleague, speak with a local business attorney immediately to stop these games.

This answer is for informational purposes only and is not legal advice regarding your question and does not establish an attorney-client relationship.

Posted

As noted a contract is not binding unless signed by all parties. You should consult with a business lawyer.

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Posted

Your situation is not entirely understood here.

Further, it is possible to demonstrate assent to the agreement in other ways than just signing physically on the document. For example, if you had an email acknowledgement "got that agreement you sent Bill, everything looks great" this may be enough to prevent the other party from later claiming they never assented.

The facts and circumstances really depend. I would advise discussing with a lawyer in private. The good news is that most of us here, including myself, offer a free phone consult.

Best regards,
Frank
Natoli-Lapin, LLC
New York, NY
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