• Business agreement between two individuals

Hi, I am running a website and my friend wants to help me financially with the upgrade of the website.
And he wants to equally share the ad revenue we get through the website.
We are just two individuals and we don't run any companies.
What type of agreement should we prepare so that we have an agreement
between us which has legal sanction, thanks.
Asked 4 months ago in Business Law

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32 Answers

A memorandum of understanding can be signed between you and your friend and the same will have a legal sanctity also.

 

Regards

Anilesh Tewari
Advocate, New Delhi
17847 Answers
312 Consultations

5.0 on 5.0

If he wants to be a partner in your venture then register a partnership agreement with him based upon the share percentage as you decide. Lay down all the terms and conditions and register the partnership agreement.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

The partnership agreement should spell out all the details and future problems ie disagreements that may arise. That is why lawyers make partnership agreements based upon your kind of business you needs and requirements and then it has to be registered. A dispute settlement mechanism must also be clearly stated in the agreement.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

If an agreement is prepared then rights of both the parties will be taken care of. If any party defaults then other party will have the leverage to enforce the right.

Anilesh Tewari
Advocate, New Delhi
17847 Answers
312 Consultations

5.0 on 5.0

Please form Partnership firm and prepare partnership deed .Next step is to get Partnership firm and deed registered with the Registrar of Firm for legal sanctity and enforcement as per Indian Partnership Act 1932.

Ramesh Pandey
Advocate, Mumbai
2538 Answers
8 Consultations

5.0 on 5.0

You can enter into MOU with your friend regarding  his share in business on account of investments made by him 

 

2) in the event of breach of terms of MOU your friend can sue you to recover investments made by him 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

Your friend can sue you to recover the investments made by him in the event of breach of contract 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

1. A profit sharing agreement can be executed in this scenario.

2. The agreement will serve as the charter of rights and liabilities of both parties, and thus in case of breach of contractual obligations by one party the aggrieved party can go to court to recover the sum due with damages.

Ashish Davessar
Advocate, Jaipur
29956 Answers
864 Consultations

5.0 on 5.0

1. You and your friend may make an partnership agreement and form partnership firm deciding your share to run the particular business. 

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

In my opinion forming a partnership firm in this situation is best way forward though you and your friend may also enter into memoredum of understanding .

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

Yes MOU can be used legally to recover the shares value.

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

You can execute a mou for the same and register it was

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

A MOU haa legal enforceability and thus in case of violation he can recover the amount. 

Swarupananda Neogi
Advocate, Kolkata
2904 Answers
6 Consultations

4.7 on 5.0

You can enter into a partnership deed  and can start this company as a partnership firm.

In the partnership deed you can include the clauses that may suit your circumstances including the sharing of the revenue and other issues. 

The mode and quantum of sharing of ad revenue also can be made a clause in the agreement.

Get the partnership deed registered to have it recognised legally.

 

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

The partnership deed duly registered shall give the legal validity of the conditions agreed between you both.

The clauses therein can be enforced by either of the aggrieved party through court of law in case of any dispute at a later stage.

 

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

As per Section 10 of the Indian Contract Act , all agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object and are not expressly declared to be void.

- Hence, if you dont wanted to run the business in the name of company , then you can enter into an agreement i.e MOU with your friend after narrating all the  possibilities in details for the profit /loss sharing of the business. 

MOU is a statement of understanding between two or more parties which when made has no enforcibility in the eyes of law , as such an agreement has no intention to create a legal bond between such persons. 

- But , when an MOU has been made as per section 10 of the Indian contract Act, then it is a valid agreement.

- Further , no stamp duty is required on MOU, except if the MOU for an agreement to purchase immovable property worth more than Rs. 100/- , then it is mandatory to be registered and stamped .

- And further , you can also enter into a Partnership agreement/deed as well, but the registration of partnership deed is mandatory as per law. 

- Yes, in all the cases , whether you enter into MOU or partnership deed, he will have his right to claim legally in case non payment as per the agreement. 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

1. Both of you can execute a registered "Revenue Sharing Agreement" with proper strategic clauses, terms & conditions relating to revenue sharing, termination clauses, time limitations etc....  This would be legally valid and would also be required for both's income tax purposes.

Hemant Agarwal
Advocate, Mumbai
5441 Answers
25 Consultations

5.0 on 5.0

you both can execute MOU, the Memorandum of Understanding (MoU) is a written document which describes the terms of an agreement. 

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

he can file recovery suit against you. 

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

1. You may send document their he may sign and notarize same outside India and send copy back for your record.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

Yes

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

Agreement may be signed digitally by both the parties. 

Regards

Anilesh Tewari
Advocate, New Delhi
17847 Answers
312 Consultations

5.0 on 5.0

Yes you can enter into an agreement as desired by you.

But you should chalk out the process of tackling the legal complications, if any, that may arise due to any dispute between you two at a later stage, because being a NRI, you may not be able to take any effective legal action against him to recover the money if he is not responding or not visiting the country for a long time.

 

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

Partnership Deed is still possible. 

Partner living abroad may get his her authentic consent on deed before Indian Embassy officials and despatch it to India for registration with Registrars Firm by partner living in India. 

Ramesh Pandey
Advocate, Mumbai
2538 Answers
8 Consultations

5.0 on 5.0

It does not bar your fiend from carrying on business in India 

 

deed of partnership or MOU can be entered into 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

1. There is no bar in executing any Agreement with an NRI, provided the agreement is stamp duty paid and registered.

2. An MOU has no legally enforceable value.

Hemant Agarwal
Advocate, Mumbai
5441 Answers
25 Consultations

5.0 on 5.0

You can execute a contract with him even if he is a NRI.

Ashish Davessar
Advocate, Jaipur
29956 Answers
864 Consultations

5.0 on 5.0

Yes you can. You have to mention all the details and taxes have to be paid.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

Yes he can but the said mou needs to be registered and attested the said embassy for authenticity

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

Dear Questionnaire

 

There are two alternative to  solve your query is either enter into a partnership agreement or simple agreement to borrow money in consideration to share revenue profit of firm .

In the partnership firm , every partner is considered as agent of another partner and acts of each partner binds other partners . So there is always a risk factor of acts of another partner when specially that partner is not present and constantly in touch with each other. Moreover each partner in equally responsible for the profit and loss of the partnership firm . Due to these restrictions of the firm , it may not be proper way for you or your NRI friend as well.

 

One can enter into an legal agreement with another to borrow money  and pay consideration for time value of money by way of share in profit of firm in place of interest .This is specially provided in the illustration to section 6 of Partnership Act , 1932.

 So it is proper to enter into an agreement to borrow money any consideration by of sharing certain percentage of profit of revenue. This will facilitate to avoid all the restriction of partnership while providing for sharing of profit of firm . Care will be taken to provide consideration in case of no profit in particular year, either certain percentage of interest or specifically provide that no consideration be given in case there is no profit in a particular year    . One has to provide jurisdiction clause also in the agreement so as avoid confusion in case of its enforcement of agreement. There is no restriction for NRI for  enforcement of this agreement in India . 

  

Krishan Singla
Advocate, Ludhiana
5 Answers

Not rated

- Since, your friend is outside India, hence a contract , whether MOU or partnership cannot be entered .

- Your friend should execute a SPA/GPA ,in favour of any relative or friend in India , to enter into an agreement with you on his behalf . 

- If you dont want to register partnership deed , then better option is MOU. 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

1. You can make a simple agreement with your friend regarding investment of fund in your website and share from revenue you recieved through ads on your site. 

2. You can also execute a partnership deed with your friend and register your partnership firm.

3. Yes your friend can legally enforce the MoU or agreement Against you if your refuse to share profits with him. 

4. Yes you enter into an agreement with your friend even if he is NRI. 

Mohit Kapoor
Advocate, Rohtak
10685 Answers
7 Consultations

5.0 on 5.0

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