An oral agreement was made between multiple parties to put together some money a

Question

An oral agreement was made between multiple parties to put together some money and open a bar and restaurant. The men first had to create a joint company. However, one potential owner was not able to provide his share of the funding at the time of the company formation and was subsequently pushed out of the deal by the other owners, who formed the company without him.

The man then sued the owners. In response, the defendants argued that the plaintiff had no documentation to support a cause of action. The court had to decide whether the plaintiff's complaint and statement of fact could support a breach-of-contract claim when no contract seemed to exist. Furthermore, the court considered the idea that a theory of quasi-contract could maintain a cause of action that could consist of the theft of ownership opportunity and/or breach of fiduciary duty. How do you think the court ultimately decided?

Explanation / Answer

Let's try to understand case facts first:-

a) Multiple parties are involved

b) All of them want to create a joint company together

c) One potential owner count not garner his share at the time of company formation (First party)

d) Other owners formed the company without him (Second party)

Firstly, an oral contract is a legally binding contract and is valid in the court of law. But the same needs to be proved beyond doubt to be legally admissible. In this case, contradicting statements from both parties will nullify each other until and unless it is backed by evidence. The first party can push his case for loss of opportunity and breach of trust. But, not providing required funds at the time of company formation is a breach of trust from his side too.

In all probability, second party will deny any breach of trust or deliberate opportunity loss to first party from their side. Now, due to lack of evidence, first party cannot prove his case sufficient enough and thus the second party cannot be held guilty. The case will be ruled in favour of the second party.

P.S: In such cases, even if the first party has some evidence in the form of phone calls, saved messages or e-mails, the same can be used as evidence to substantiate the claim.

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