Do I have a right to rescind an agreemnt regarding my investing in a business?
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Do I have a right to rescind an agreemnt regarding my investing in a business?
I recently invested into a business out of state. I wrote a check and was added to the business checking account 5 days ago. However, after I was able to see the bank account online, it is not at all what he told me it was. He said the business grossed 40K in 2 months, yet the most I see is 16K. How long do I have to back out of this deal and get my money back and how do I go about doing this from another state?
Asked on September 19, 2018 under Business Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If he lied about something material, or important, to get you to invest, such as the business's gross revenue, that would be fraud; fraud provides grounds to rescind, or undo, an agreement. So legally, you may well be entitled to get you money back, especially since his later actions reinforce the existence of fraud and may also constitute conversion, a form of theft: "converting" money entrusted to someone for a certain purpose (e.g. a business) to one's own personal use (putting it into his personal account).
That's the good news: what you describe seems to establsh that you have enforceable rights. The bad news is, there is no one else who will enforce you rights for you: you have to enforce them yourself. That means you will have to file a lawsuit against the business andperson controlling it. You should be able to file in your own state/county, but will have to serve on the business and him in their state, which is more complicated and costly; and if he simply ignores the suit, you will win, but then have to go through collections efforts (trying to put a lien on real estate or seize personal property or money from bank accounts, etc.), which also can be costly and complicated.
You don't indicate how much money is involved. If it's enough to justify the cost of a lawyer, hire one to help. if it's not, you may wish to, as a practical matter, write the money off.
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