[cocktailpeanuts]

It doesn't sound like you actually have a "company". Or do you?

If you didn't incorporate yet, then you owe each other nothing. Maybe your friendship will end, but that's still separate from an actual business.

Then again, I don't know if you yourself are that committed either. A month and a half off from work to prepare a speech means you're not fully committed. If this was because he's not doing much work either and you got demotivated because of that, then this entire relationship is a cancer and you should break up as soon as possible because it sounds like you will be more motivated without him.

[dragonwriter]

> It doesn't sound like you actually have a "company". Or do you?

> If you didn't incorporate yet, then you owe each other nothing.

Anything that does business is a company (incorporation is needed to form a corporation, which is a specific kind of company; the term is often also used for forming a LLC, another particular kind of company); if two people have joined together with the intent of making a for-profit enterprise but with no formal agreement, it is a partnership.

See, e.g., the first couple paragraphs of this piece, even though the whole piece is focussed on unincorporated nonprofit associations: http://www.nolo.com/legal-encyclopedia/what-an-unincorporate...

And, even when informally formed, partnerships do have consequences while they exist and steps that need to occur to finally end them. Particularly, getting rid of a partner in such a situation generally means dissolving the partnership. Here's one guide, but definitely not complete info for all scenarios: http://smallbusiness.chron.com/dissolve-informal-partnership...

[eplanit]

I know IANAL, but I don't think you are either:

"if two people have joined together with the intent of making a for-profit enterprise but with no formal agreement, it is a partnership."

No, it's not. What is "joined together....but with no formal agreement"? You can't take that to the bank, or to the court house.

[dragonwriter]

> I know IANAL, but I don't think you are either

I'm not, but I did pass Corporations (which, despite the name, covers all manner of business entities) before I left law school, so there's that.

> No, it's not.

Yes, partnerships absolutely can be formed why mere combination with a common purpose and no formal partnership document. In fact, much of the law of partnerships arose out of courts deciding how to resolve problems where people had done that.

> What is "joined together....but with no formal agreement"?

A relatively common situation that potentially creates a legal mess when it falls apart, or some third-party makes a claim involving the business.

> You can't take that to the bank, or to the court house.

You probably can't take it to the bank, because banks hate dealing with legal uncertainty and will demand that you resolve it first. You absolutely can take it to the courthouse, and many people have; of course, you'd usually do better to have a written agreement in place first, but that's often clearer in hindsight.

Moreover, other people can take you to court for it (including based on the conduct of your partner), so if you have formed a partnership by cooperation that you no longer want to have, you absolutely do want to make sure you have effectively dissolved it.

[ahakki]

At least here in Switzerland this is definitly a legal business arrangement that you could go to court over. Proving your claims will be more difficult than if you had a written formal agreement, of course.

[naivedeveloper]

Thanks for your reply. No, we do not have a company. We delayed incorporating to avoid expenses before the product was ready. Now that the product is close to being ready I'm fine with incorporating, but don't want to do so if my co-founder isn't invested.

> Then again, I don't know if you yourself are that committed either. A month and a half off from work to prepare a speech means you're not fully committed.

No, that was simply a mistake. I'm not going to take on any such side commitments for the foreseeable future. I recognized the mistake and course-corrected.

[cocktailpeanuts]

If you really did make up your mind, I suggest you first talk to a lawyer about your potential decision.

Then when all things are clear from the legal side, first try to get this to work (if you still have any hope for this guy). Sit down with him and honestly talk about what you have in mind, and tell him you want to make this work. And make him commit to several things by certain time.

Or you could just tell him you want to split up. (Again, after talking to a lawyer).

You wrote 100% of your code and there was no legally binding document that transfers your ownership so I think it should be fine, but really really I suggest you talk to a lawyer if you are serious about this business. It's worth the money.

[gnicholas]

You could incorporate, both contribute all of your valuable IP and whatnot, and receive shares on a vesting schedule. As part of incorporation, you establish ground rules for number of hours spent on the project or milestones to hit, such that either of you can be let go (and halt vesting) if the targets are not hit.

This will not be inexpensive to set up (a couple thousand in legal fees), but if you're ready to launch and want to clean up your legal situation, it could be worthwhile.

Right now you would likely be considered to have a partnership, and you each have rights under that (which vary from state to state). If you go off and build this on your own without a document that your friend has signed, you'll be on shaky ground if he/she comes back after you've become successful. For what it's worth, I am a former lawyer (but never specialized in this particular area of law).