Business Contracts Partnership Agreement

[Sandra1]

Good Morning,

I entered a partnership agreement in Oct. 2013 for 30% ownership of a bar/restaurant in Westchester NY. The bar was not doing well because of the location, fights that occurred a some years ago and bad management, however, it was our belief that we could turn it around. So here is the rundown: I own 30% (partner A), a second partner owns 30% (partner B) and the original owners 40%. The 40% owners is also the landlord for the building, which is a residential/commercial property so there is also a lease agreement that requires myself & the other 30% owner to pay rent for the space.

The partnership agreement, which we signed states, "cash contributions are non-refundable and that (Partner A) and the other (Partner B) are expressly jointly and severely acknowledge that the bar represents and warrants as a partner he will derive material benefits fro the non-refundable release of the cash contributions of (Partner A) & (Partner B) which was the sole reason and decision to enter into this Partnership Agreement".

Issue 1: Partner B dropped out in January,which left me to run the business by creating ways in which to draw in revenue and pay the bills. More importantly, I was informed that I am responsible for paying Partner B's portion of the monthly installments of the partnership agreement ($708) plus his portion of the rent.

Issue 2: After several attempts, I was finally able to create revenue generating weekly events that begin a few weeks ago, however, last Thursday the day before the next event--I was told that I can no longer hold events. The reason I was given by the original owner/landlord was that the bar is not insured and in order to continue doing the events I would need to sign a document stating I would assume 100% liability for any incidents that may occur.

Question 1: Can I use this as grounds to void the partnership agreement?
Question 2: Should I have received a business certificate stating my name as partner and because I didn't--claim that the partnership agreement was never legitimate to recoup some of my money.

Thank You,
Partner A

 

[army judge]

What you've posted isn't enough information from which I can render a proper opinion.
It wouldn't be in YOUR best interests to reveal more, either.
I'll venture a guess that what you're calling a partnership agreement might not be that.
It might be something that approaches a contract, but that isn't clear.
If one partner can simply assign his responsibilities to another partner, I'd question what I was doing involved in such a scam.

If I found myself in such a quandary, I'd simply walk away (assuming you haven't entagled yourself in something more complicated).
It appears your partners are crooks, scammers, or scalawags.
Perhaps, they're ALL three.

Maybe you should walk away?

What you don't want to do, is act based upon the advice of strangers.
You probably want to run what you call the partnership agreement by an attorney in your county.

My suspicions are that you're involved in a garden variety scam, and they're robbing you blind, as well as working you to death.

 

[Sandra1]

Thank You for your reply--partner B is my stepfather, I saw that we had entered into a bad agreement and decided to walk away before he lost any more money. I didn't walk at that time because it was dead of winter and believed that business would pick up in spring and summer.

 

[army judge]

Thank You for your reply--partner B is my stepfather, I saw that we had entered into a bad agreement and decided to walk away before he lost any more money. I didn't walk at that time because it was dead of winter and believed that business would pick up in spring and summer.

You also need to know what type of partnership you think you've formed.

Barring the correct FILING, you may NOT be in a partnership.

From what you've posted, I don't think you have a legal, binding partnership.

The fact that you never properly filed your document with your county, (or state) authorities negates any partnership formation.

You also need to consider possible tax ramifications of improperly engaging in any business, especially in tax HUNGRY state like NY!!!

That's fundamental to a partnership formation.

For instance in NY there are Limited Liability Partnerships and General Partnerships.

This might help you better understand what you are part of, or perhaps what doesn't exist.



General Partnership

A Certificate of Assumed Name (following an agreement of the partners) with the clerk of the county/ies in which the business is conducted.
Personal liability is joint and individual for the general partners who are responsible for the obligations of the partnership.
The life-span of the business is for a designated period stipulated in the partnership agreement; or until a dissolution event occurs.
For purposes of taxation* a general partnership is not treated as a separate taxable entity; business income is taxed through each general partner's personal tax return.

Limited Partnership

A Certificate of Limited Partnership (following an agreement of the partners) and a Certificate of Publication must be filed with the Department of State.
The life-span of the business is for a designated period stipulated in the Certificate of Limited Partnership; or until a dissolution event occurs, subject to any right to continue that may be stated in the partnership agreement.
Personal liability is joint and individual for the general partner(s) who are responsible for the obligations of the partnership; limited partner(s) are liable to the extent of their capital contributions to the partnership.
For taxation purposes* a limited partnership is not treated as a separate taxable entity; business income is taxed through each partner's personal tax return.​

 

[Sandra1]

Wow! The information you have provided has helped in a big way. THANK YOU SO MUCH!

 

[army judge]

Wow! The information you have provided has helped in a big way. THANK YOU SO MUCH!

No worries, we all enjoy helping where we can.