Can you be sued for having just a verbal agreement with your partner about profit sharing?

I have a company and we only have a verbal agreement about the profit shares. I’m planning to fire him because he can’t commit full time with the company as he is working with another full time job as well.

  • Depends on what state you are in, I’d advice you consult with a lawyer. Also, talk to your partner, maybe he’s willing to let go of his full time job for your project.

  • Who thought up the idea? Are you incorporated or llc? Better get things in order if you have revenue that generates profit.


  • Was the verbal agreement ever discussed with others or referenced in emails? If not its a he said she said. Sure you could still be sued but hey there’s no proof unless he’s wearing a wire. But yes a verbal commitment is often as good as a contract in many states. It just depends on how much of a d**k you want to be. There are many such characters in silicon valley and they get away with it.

  • Here’s what one of my law professors told us in our first year of law school: “You can sue the Pope for bastardy if you can pay the Court costs”. Whether the agreement is verbal or written is irrelevant. The decision is actually up to you. If you had a verbal agreement you can either (a) choose to disregard it and run the risk of being sued (b) honor it or (c) sit down with the person you’re about to fire and negotiate a middle ground that will be a lot less costly than litigation (both from a financial perspective and draining emotional resources). Among your options are to offer to buy out his interest at a substantial discount where payment is deferred until you have a liquidity event. He and you may discover that a negotiated solution where neither of you is happy is the most effective way to avoid litigation. The lesson to be learned here is not to offer equity to anyone unless you retain the right to buy them out for a nominal sum if things don’t work out. Good luck.

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