Have you had a handshake agreement that went sour?

We brought an old friend on to an important project that was going to require a lot of work so we told them we'd split the pay equally three ways.

(This amounted to at least double what they would've been paid had we hired them at their normal hourly rate. We thought it would be a good motivator because we wanted the three of us to "own" this project together.)

They spoke with a lot of confidence, even said they would be better suited for certain tasks than we are.

Plus they were an old friend who we respected so we thought it was a great opportunity for everyone.

As a direct result of this person's involvement the project became two weeks behind schedule, they are nearly impossible to get ahold of, resist or object to almost every request we make, torched a bridge with an important client contact, and have used this opportunity to promote themselves, taking credit for the project in front of potential clients.

The work they have done, we've had to follow after to reinforce and often times do ourselves. At this point we would've been better off not working with this person at all.

We've paid them 2/3 upfront for the work that they've been terrible at and have already decided to never work with them again.

But the idea of paying them the remaining 1/3 of the deal doesn't feel good considering they have been absolutely terrible.

We are going to pay them because we believe it is important to live up to a deal, good or bad. I feel like we gotta be true to our word even if others are not. But I really would love to change my mind if there is an ethical, moral, and honest way to do it. I just haven't been able to find one.

What would you do?

[Edit] Clarified the money situation.

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