What to do when partners have dropped out?

This is my situation. I had an idea and wanted to start developing it into a product. I brought in my first "partner" which is a guy I work with on a regular basis, I kicked some ideas around with him and he gave me some ideas on features, I knew he had a marketing background and asked if he wanted to go in on the venture with me, and he agreed.

The second "partner" I brought in was a designer. I traded work for his initial design, I did programming for him and he provided the design for the website. After we concluded that deal he expressed an interest in becoming a partner and doing all design on the project.

We built a pretty cool proof of concept at which point I said that we needed a partnership agreement to continue moving forward with the project. I had a legal agreement drafted up and sent it out to both partners.

Neither "partner" signed it, the marketing guy seemed like he didn't care and that it didn't really matter all that much to him and he just dropped it. We are still friends and on speaking terms but he doesn't show any interest and we don't talk about the venture anymore.

The second partner objected because he wanted a larger share of ownership. We are no longer on speaking terms and he has basically dropped off the map.

My question is, since neither wanted to sign the agreement and haven't expressed any further interest can I safely continue the project and see what it might become, or will this be a legal nightmare if the company ever becomes profitable?

A few more details in terms of showing ownership:

• I logged the most hours to the project on development
• All monetary funding came from me personally, such as infrastructure domain purchases, legal documents and media assets
• The agreement which was not signed clearly stated that I would retain majority ownership

You are definitely not the first person to go through this.

For a real world example, and what it can cost if you don't get releases from your (former) partners, simply go watch the movie Social Network. In that case the Winklevoss brothers became multimillionaires when they sued Facebook.

In virtually all cases you are better off parting amicably if you can and getting written releases from your (former) partners.

So to specifically answer your question:

My question is, since neither wanted to sign the agreement and haven't
expressed any further interest can I safely continue the project and
see what it might become, or will this be a legal nightmare if the
company ever becomes profitable?

If I were in your position:

Partner number 1:

I'd feel confident with this one. There is no work or IP or anything real based on what you provided. Given the response/interaction it seems to be no issue.

Partner 2

Likely ok with the first bit of work since you bartered services. You had an understanding that each would do work for the other.

For the second bunch of work (proof of concept)- I would proceed in one of the following ways since it appears there is some of his work involved:

• If you want to work with him in future negotiate the terms/partnership arrangement to be mutually agreeable
• Since he doesn't agree with your terms ask him to come up with a number/figure or other work from you as barter/payment so you own the work he did.

Sign an agreement assigning ownership to you/company.

If he does not agree - just re-do the work he did/remove it from your project/site.