Legal Question in Business Law in California

Re: Ref: Business closure and contracts

This seems to be a relatively simple matter of contract interpretation. Some awareness of partnership law is necessary as well in analyzing the posture of the parties here. An attorney assisting you and/or your husband would simply need to ask (1) what agency agreements (contracts) are or were in place between the middleman and either your husband or the old partnership, and (2) whether your husband possibly is beholden to the middleman in any way beyond basic agency/contract law, such as through ownership of rights to intellectual property such as copyrights.

If the agency agreement was between the middleman and the old partnership, it seems doubtful to me that the middleman can assert any rights directly against your husband. If his contract is breached, his claim is against the former partnership, not your husband. Of course, as a former partner, your husband could be indirectly liable for the middleman's claim (if he has one) in his capacity as a former partner.

My hunch is that there is no contract with the middleman that can be enforced beyond the breakup of the partnership and your husband's ceasing to use the middleman's services. Contracts of this kind tend to "at will" rather than for a definite term.

So the bottom line is to ask yourselves "what is the contractual basis of the middleman's possible claim, and against whom can it be asserted?" More that likely, you have an "out" because (1) the contract can be terminated at will, or (2) the contract is between the middleman and the partnership, not your husband.

If you hire a lawyer, check their knowledge of partnership law as well as contract law.

Re: Ref: Business closure and contracts

Depends. Regardless of the details of who has what rights, if he pursues this, you need to either resolve/settle it yourselves, have an attorney do so for you, or potentially face a lawsuit. If you want a snap answer of no value to you, we can give you one. What would you do, wave a print out of it at the person and think he'll run in fear? If you want to consult and actually get an informed opinion after review with you of the facts and documents, feel free to contact me. Then, if legal action or involvement of counsel is required, we can decide how to handle that.

Re: Ref: Business closure and contracts

What was the prior company? A corporation, general partnership, LLC? What about the new company? This may be relevant to determine who the actual parties were to the contract with the middleman.

Liability for any new commissions will depend on the contract relationship between the middleman and the previous company (or individuals). If there was a written contract, and it identified the former company as the party, and the former company was an entity of some sort, the middleman is likely out of luck.

If the middleman can prove that the previous company was dissolved and the new company was set up to avoid his commissions, he may have a case for fraudulent transfers, or successor liability. However, this seems unlikely as the former partner is not associated with the new company.

Re: Ref: Business closure and contracts

This area of the law can be fairly "tricky". Your husband's former, now defunct business had the client at issue initially, as well as the commissions agreement with the rep now harassing you. Thus your husband here is the "x" factor per se in a full assessment of your/his rights and/or obligations legally to the rep at issue now. The most effective way to fully evaluate your legal situation herein would be to have the employment agreement/contract initially signed by the rep and your husband's former company legally reviewed ASAP, to see if there is anything legally relevant therein that does or does not cover this rep in the event your husband's former business termintated. If you would like further legal assistance, email our Law Firm directly with your request. You may also want to strongly consider a fair settlement offer to this rep to end the harassment once and for all. Our Law Firm can also help you with that, if need be after a review of the rep's employment agreement, and/or alot of other helpful legalities to further protect and expand your new business.

Re: Ref: Business closure and contracts

In order to provide completely accurate advice, you really need an attorney to review the initial commission contract. You should be able to defend against the demand since you have a totally new company. The strength of this defense would also be dependent on how you set up the new company. I am willing to speak further with you regarding this issue. From a practical standpoint, how far people are willing to push often depends on factors such as the amount of money involved as well as the cost of defending an action and likelihood of winning.