can my business partner sue me for money that has yet to be earned?
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can my business partner sue me for money that has yet to be earned?
A ‘friend’ and I were in the process of starting a business together 50/50 we
both were doing a lot of work getting it going she had 4000 invested and has
since decided to throw in the towel . I have returned her money now she says she
is going to sue me for what she says adds up to 127 hours of labor at 15 an hour
we had discussed an hourly wage at one point but went 50/50 on business instead.
business never has actually even started or opened no money earned . she bailed
out on me now wants a bunch of money.. its all verbal nothing in writing.never
promised any money up front or made any promises.
Asked on November 10, 2016 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
No, she is not entitled to be paid for the work she put in if the agreement was that she would receive an ownership interest rather than a wage: the ownership interest was her compensation. She cannot now change the agreement after the fact. That doesn't mean, however, that she can't file a lawsuit and force you to respond to it: the law does not "prescreen" lawsuits to make sure they have justification (and if she does sue and you fail to respond, you will lose automatically, but default). If she does sue you, she would have to be able to convince the court by a "preponderance of the evidence" (that is, that it is more likely than not) that there was either instead of or in addition to the partnership agreement and her share of the company, an agreement (even if only an oral, or unwritten one) to pay her $15 per hour, and also convince the court of the number of hours worked. You have an advantage in that, as the person suing, the burden of proof is on her: she has to be more credible or believable than you, since if everything is equal, you win, because she failed to affirmatively prove her case. But the absence of anything in writing means she could potentially do this, if she is believable or plausible enough; in the future, always put agreements like this in writing, so as to have written proof of the terms.
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