Not every deal starts with a contract. Sometimes, people assume that a shared understanding is enough, that a written agreement isn’t necessary, or that they’ll document it later. Sometimes that works. Informal arrangements are fine when things are going well. But when a business relationship breaks down, the lack of a legal contract can cause significant problems.
A recent case I litigated in Colorado illustrated how this plays out. The parties agreed that there was a partnership. But the litigants disputed the identities of the partners to the agreement and to the terms of their complex arrangement.
Cases like this are common and can be incredibly difficult and expensive to prove in court. In this one, following years of discovery, the court examined evidence of what the parties said and did when the relationship was formed. Emails, text messages, conduct, and credibility all factored into the analysis, with the court ultimately finding that a binding agreement did exist in the manner my client had contended and entering a $3.1 million judgment in my client’s favor. And the court found that the other side had tried to use the informality of the arrangement to avoid its obligations to pay under their agreement.
