A few days ago, I reached the end of a legal nightmare. My corporation partner and I could simply not get along. We couldn’t agree on how to run our business, and our relationship deteriorated to the point where we were hurting the company. Knowing we could no longer work together, she offered to buy me out. Unfortunately, we couldn’t find any agreement as to the price. We both contacted a lawyer, and we spent the next several weeks discussing and getting nowhere. My partner’s attorney suggested adding someone else to the dealership. In other words, they wanted to add another owner, who would take sides with my partner, to give him a majority.
I had not given permission to bring in another member to our corporation team. Since we were 50/50 partners, there was no way to get a majority vote at that time without including me. This argument turned extremely unpleasant and my lawyer finally asked to see a copy of our business’s operating agreement. Unfortunately, we had not invested in a formal operating agreement, but simply went with a generic form we found online. There was nothing in there to prevent the addition of a new owner being brought in without unanimous consent.
My lawyer was shocked by the unclear language of the flimsy agreement, and told me I had not protected myself at all. She said that we should have had our operating agreement drafted by a lawyer. We had hoped to avoid that expense, but in the end, it cost me way more to cope with the resulting problems..