I, the MD of a company made a new business partnership MOU with a person who promised to bring funds worth 20 cr for my new project.
He failed to pay the upfront money to his contact for some ego reasons.
I am now ready to pay the upfront to his contact after we spoke recently.
I was told that if I remove him as my business partner, he may file a legal and then i wont be able to acquire the loan from the contact.
The MOU only covers our profits ratio and long term association.
How best do I handle this situation to remove him as my partner and acquire the loan from his contact since the contact is ready for direct transactions and isnt in good relations with him.
Asked 4 years ago in Business Law from Bangalore, Karnataka
MOU is used to gauge the intention of the transacting parties before a deal is officially signed between them and doesn't grant either of them any rights, unless there is monetary exchange mentioned in it. It differs from definitive agreement.
In your case MOU is not enforceable legally and you may terminate it.
Advocate, Navi Mumbai
Best option is to terminate the MOU legally. And form new entity, may be propitiatory firm and start dealing with that contact directly.