VIC Contractor Claiming to be a Business Partner?

[Startup Girl]

An acquaintance and contractor is claiming to be a partner in the company (LLC) that my husband and I own. There is no written contract with her and she only worked with us on organising an event for a few months. Now she is claiming that she is a partner in the event and that I can't organise any future events without her consent or she will sue us.

She was paid a share of the profits from the last event but the majority of the profit was kept by our company. Our company also managed all income & expenses.

We are seeking legal support even though it is a micro-business and we have just started.

 

[Rod]

It would be clear that as she is not a director and not a shareholder, and assuming you are trading under the LLC name and not something else, that she has no case, unless she has some correspondence from you or your husband saying she will become a director or shareholder. It is not possible to be a 'partner' in an LLC.

She would be considered a contractor for your purposes and paid on a per event basis from profits. This does not make her a partner.

Real question to be answered is can she prove she was to be made a shareholder or director.

You need to think about what you want as an outcome (eg sever all ties or strike a deal because she has some expertise you need or ....) then work towards achieving that end. If it is sever all ties, then tell her straight up that if she sues and loses, you will be seeking costs orders against her for your costs in successfully defending yourselves.

If you want to keep working with her (sounds risky now if you do), then it more a business decision and only partly legal.

 

[Startup Girl]

Thank you Rod. Much appreciated. Her only point is that partnership act allows her to be a partner in our events even though there was no agreement and the event was run under the company (the PTY LTD). We had no correspondence with her about making her a director or a partner. She does not have any special skills that we need for other events.

Greed drives some people. She seems to be one of those.

 

[Tim W]

Let her sue you.
It's a matter for her to show that she has a claim.

 

[Startup Girl]

Thanks Tim. But we want to be proactive and avoid future troubles. Even though she has no case, it might become a major distraction for us to focus on our infant business.

BTW, in your experience can someone claim partnership in an event and not the business? Is it actually possible?

 

[Tim W]

Pro-active? Righto then.

Incorporate your business. Register the event name as a trademark.
Put some money aside to fund a response to any claim she might make in the future.

 

[Startup Girl]

Brilliant! Will do so. You guys are awesome!