Business Loan Default - Verbal Agreement?

[Sutho71]

I own a small part of a business I also manage and was recently offered a larger part of the business with a loan from the business, all on a handshake no agreement. Sounded good at the time but I never really understood how it all worked and was talked into it on other partner's terms. Not wanting to let them down I made payments for 6 months but it was clear I could not afford to do it.

With no actual agreement in place, I want to just go back to owning my small portion and not continue with this business loan. Where do I stand under contract law?

 

[Owens Lawyers]

An agreement can exist even if it is not in writing. You may not be able to get out of what you agreed to, without breaching the agreement and possibly being liable for damages.

 

[Sutho71]

i can no longer afford to pay a handshake loan to purchase more of a business i am in what options i have?
own 5% and was given a loan from the business to pay off another 15% but cannot afford the repayments with the birth of my son.
can i surrender the balance of shares (not purchased) back to the company and just go back to owning my 5/6% (already paid for)?
at the moment the only money going towards the loan are any dividends i receive, which is more than enough to cover the interest and more

 

[John R]

In the absence of a written loan agreement or shareholders agreement, have you discussed your circumstances with your business partners to understand whether a practical resolution can be achieved?

 

[Sutho71]

they do not want to buy share back, i need some options, do not want to go into liquidation. i am putting all distributions made into loan so is that enough, to stop action? what is the minimum i have to do to keep them form sueing me?

 

[John R]

Hi @Sutho71,
Per my earlier question, have you discussed your change in circumstances with the other shareholders? If yes, what did they say?