Disputes Over Business Ownership and Revenue Sharing without a Written Contract
Question:
My friend and I started a business in 2019. She came up with the concept, but I handle 80% of the operations. We didn't formalize our ownership or roles in a contract. Now we're facing problems dividing our revenue, and I believe I deserve a larger share due to my significant contributions. What are my legal options?
Answer:
Establishing Ownership and Contributions:
Verbal Agreements: In the absence of a written contract, any verbal agreements you've had with your friend about ownership and roles can be considered. However, verbal agreements are more challenging to enforce than written contracts.
Evidence of Contributions: Document your contributions to the business as comprehensively as possible, including financial records, operational involvement, and any correspondence that may substantiate your claims.
Legal Options:
Negotiation and Mediation: The simplest way is to come to an agreement with your friend. If direct negotiations fail, you might consider professional mediation to help resolve the issue.
Legal Action: Filing a civil case for "Quantum Meruit" or what one has earned could be a recourse if you believe you've significantly contributed more than what you're getting. This requires substantial evidence of your contributions.
Partnership Implications: If no formal agreement exists, the default legal structure of your business could be a general partnership. Under Philippine law, profits and losses in a general partnership are shared equally unless there's an agreement stating otherwise.
Dissolution: If disagreements persist and you cannot come to terms, dissolving the business may also be an option, where assets and liabilities would be divided as per legal requirements.
Future Precautions:
Written Agreement: For future ventures, it is advisable to have a written agreement specifying each partner's roles, contributions, and share of the profits to avoid similar disputes.
Legal Advice: Consult with a legal advisor to discuss the specifics of your situation and to draft any future agreements to safeguard your interests.
Conclusion:
In absence of a written contract, your options may be limited, but legal recourse is still possible. Accumulating evidence, negotiation, and legal action are your main pathways to resolving this issue.
Disclaimer:
This article is intended for informational purposes only and should not be considered legal advice. Consult a qualified attorney for advice tailored to your individual circumstances.