Question

Nasir, a house painter, and Miguel, a general contractor, met for lunch one day. During lunch, Nasir and Miguel decided to go into business together, wherein Miguel would send painting referrals to Nasir, Nasir would perform the work and both Nasir and Miguel would split the profits from the business evenly. Miguel has a large net worth and so he was worried about personal liability in the event Nasir caused any damage and was sued. To reassure Miguel, Nasir takes out a piece of paper and writes up a very simple agreement detailing how the business will be run, and that Miguel will not have any management of the day to day operations of the business and will instead only provide upfront capital of $2,000 to help the business get off the ground. Both of them sign the document drafted by Nasir and go their separate ways. No documents are ever filed with the State. Six months later the house painting business has earned $50,000. Miguel has never provided a referral or performed any of the work, so Nasir has elected not to pay Miguel. Miguel sues Nasir seeking 50% of the income earned by the house painting business. What is the outcome?

Use IRAC method for this question.

Answer 1

ISSUE, RULE, APPLICATION,CONCLUSION (IRAC Method)

ISSUE: In the present case issue is whether Miguel can sue Nasir for 50% of income earned by house painting business.

RULE: Every agreement in order to be valid legal document must be filed with the state.however in this case both of them sign the document drafted by Nasir and go their separate ways. No documents are ever filed with the State.

APPLICATION/ANALYSIS: From the facts presented above it can be inferred that there was breach of the trust between the parties as they have decided that Miguel will be providing the painting referrals to Nasir neither performed any work. even though they have created a document that was created to limit the liability of Miguel only and to introduced the capital of $2000 to help the business get off the ground however Miguel provided the capital to start the business cause of which business could grow that much.

CONCLUSION: In view of the above analysis it can conclude that Miguel has the right to sue the Nasir due to the agreement between both the parties and also due to the capital infusion with the help of which business is grown.