Business Buy Out
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Business Buy Out
I started a childcare business with a partner almost a year ago. Neither brought any money to the business. We used the parents’ deposits for holding spots to get started. Now she says that owing a business is too stressful for her. Her name is on anything except the lease, which we still owe 7 months on. She gave me her 2 week notice and wants me to ‘buy out’ her part, but we don’t have anything. Do I legally owe her anything since she’s walking out? Does she owe half of the lease since both names are on it?
Asked on January 7, 2018 under Business Law, Mississippi
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
1) There is no obligation to buy her out unless there was a formal written buyout agreement (or buyout provisions in some other document, like an LLC operating agreement) requiring a buyout. Otherwise, it is voluntary whether to buy her out or not. You might choose to do so, to sever the relationship cleanly, but without an agreement requiring this, you would have to agree to buy her out, which means it would have to make sense for you.
2) If she is on the lease she is obligated under it. If she does not pay her share, you could sue her for it.
This suggests that a possible "buy out" might be you taking over her lease obligations in exchange for her giving up all claims to the business.
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