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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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I ran a mail order business as a sole trader from 2012-2014.

Resolved Question:

Hello,
I ran a mail order business as a sole trader from 2012-2014. During that period I had an unofficial partner who provided the stock and developed the products whilst I managed the mail order business (setting up the systems and managing the daily operations). Each of us made drawing from from business bank accounts held under my name and shared the business decision making.
In late 2013, he borrowed 19K from me as a personal loan to produce a new product on the agreement I would be paid back from the product sales. However, after one year had passed, I had still not received any loan repayments, although the product was steadily selling.
Around that time I decided to terminate our business relationship and he started his own mail order business and continued selling the products. As part of the hand over process he offered an ex gratia sum of 15K for the works I had performed over the 2 years and also for the systems I had developed. As such, I handed across the systems and instructions for his new staff.
However, he still didn't honour the repayments for the 19K loan which forced me to use the business monies still held under my bank accounts to live on whilst we re-negotiated a different repayment contract.
These talks proved fruitless even though I had brought in several mediators and passed across all of the information at my disposal.
In the end he offered to repay me the loan on the condition I work for free for 18 months training his staff and also on the condition that the monies I had taken from the business accounts would be deducted from the original 19K loan amount.
In response, I reject the offer and left with the monies I still held in the business to live on. These funds equated to a small proportion of the amount owed.
To date he has sold all of the products that I paid for and also refuses to acknowledge the obligation to pay for the 15K for the works I performed, despite him using the systems I developed which are integral to his mail order business.
Likewise, he has refused to repay the 19K loan unless the monies I used from the business accounts are deducted from the original loan.
In conclusion, I believe that the business relationship would be considered an 'implied' partnership. As such, I legally deserve a share of the business assets or some form of consideration when I terminated the relationship?
As such, I feel that the condition of an ex gratia payment was unreasonable and would not be a valid excuse to allow him to walk away from the relationship without the business shares first being divided reasonably?
Lastly, although I have sent all of the bank statements I have at my disposal he is using a missing overseas bank statement as the reason to refuse making any type of payment. These accounts were closed in 2014 and the bank said the account was deleted which I can get in writing.
However, the only reason the bank statements came into the equation was because he defaulted on the original loan agreement which forced me to use the business bank accounts.
Moreover, I do not believe that the 19K personal loan I made to him can be subjected to deductions coming from our business relationship and instead any deductions should be made from the business shares?
If you have any advice please let me know.
Thank you
Submitted: 1 year ago.
Category: Law
Expert:  Ash replied 1 year ago.

Hello my name is ***** ***** I will help you with this.

What is it you want to achieve please?

Customer: replied 1 year ago.
Hi Ash,I have given him notice that I am filing a Money Claim with the Civil Court to have the 19K loan repaid via a court order including interest and the 15k for the works performed.As such, I would like the 15K for the works I performed recognised as an obligation for him to repay or to have the business recognised as an implied partnership in order to claim fair consideration for the systems he took with him after I had terminated the business relationship. Once I know were I stand I can provide him with the business bank statements in order to deduct the monies I withdrew from the accounts from either of these business related amounts.The main thing I need is to have both the loan and the works performed recognised, otherwise these deductions will come from the 19k personal savings I loaned him and I would be losing 2 years of work in the partnership without reasonable consideration.On the other hand, I also understand because the business was operating as a sole trader under my name that he would have to prove it was an implied partnership in order to be able to claim deductions against the loan I made him. For example, as the bank accounts were held legally under my name I had every right to use them any way I wished and he would have to prove he had a right to a portion of the funds. In this case, I still would be able to claim fair consideration as a partner after the terminating the business relationship.I understand there are possibly other legal areas and issues involved. For example, I was faced with coercion as he was using the loan repayment as leverage to force me into working 18 months for him for free. Accordingly, if a fair and reasonable repayment plan had been offered then I would have used the loan repayments for living expenses.As such, I do not want to have the issue of providing bank statements preventing him from repaying me because certain overseas statements are no longer obtainable and he created the necessity for this requirement which has muddied the waters.In light of the above, I would like some legal advice on what avenues and arguments I can use to prepare a Money Claim to reach these objectives.Thank you
Leon
Customer: replied 1 year ago.
The last paragraphs should read:I understand there are possibly other legal areas and issues involved. For example, I was faced with coercion as he was using the loan repayment as leverage to force me into working 18 months for him for free.Accordingly, if a fair and reasonable repayment plan had been offered then I would have used the loan repayments for living expenses. As such, I do not want to have the issue of providing bank statements preventing him from repaying me because certain overseas statements are no longer obtainable and he created the necessity for this requirement which has muddied the waters.
Customer: replied 1 year ago.
3rd to last paragraph should read:I understand there are possibly other legal areas and issues involved. For example, I was faced with coercion as he was using the loan repayment as leverage to TRY and force me into working 18 months for him for free.
Expert:  Ash replied 1 year ago.

You know if you claim £15k and lose, then you would be liable for the legal costs of the other side?

Customer: replied 1 year ago.
I am aware of that. The main thing is that I need a legal argument to take it to court. I am thinking about an implied partnership to try and get consideration for the $15K.On the other hand, another option is to refuse to disclose the bank statements and take him to court to pay me back 100% of the 19K loan.In this way he would have to prove he has the right to deduct monies I used from the business accounts and the only way for him to do that would be to claim it was an implied partnership and then I could claim for consideration after terminating the business relationship.
Expert:  Ash replied 1 year ago.

If he didnt repay the loan, isnt that enough to bring a claim?

Customer: replied 1 year ago.
that would be enough but i do not want business deductions coming from the loan. So i need to prove he also owes me the 15k for works performed otherwise the deductions eat into my savings.
Expert:  Ash replied 1 year ago.

Do you have the £15k for works in writing?

Customer: replied 1 year ago.
He made it in writing as an EX Gratia payment which means he is not legally obliged to repay it. He also had it in writing that it would only be made after he had restored his house which he hasn't the money to do yet. As such, I need some way to make it a legal requirement through the implied partnership arrangement.
Expert:  Ash replied 1 year ago.

You have a contract - he offered £15,000. This can be legally binding unless said he it was without admission of liability.

If he didnt say this and offered £15k then you have a claim.
Clearly if the staff and product was transferred you would expect to get paid for this.

You have not been. So not only does he owe you £19k for the personal loan but £15k for this payment which he offered.
This claim is for breach of contract

Can I clarify anything for you about this today please?

Customer: replied 1 year ago.
The product and systems where transferred but he got new staff. He just said that the $15k was a good will gesture in recognition of the works I did for the business and the systems. He said this in writing, I do not have a contract.
Expert:  Ash replied 1 year ago.

Yes its in writing. You relied on this - you can claim on that basis.

That was the reason the product and systems were transferred.

You needed to get something in return for that.

Does that clarify?

Customer: replied 1 year ago.
thank you. So my argument is that he didn't make the offer using the terms ' without admission of liability'?Also, would i be bound by his conditions of ex gratia or completing the house or would a judge consider them unfair conditions so i could claim immediatley?
Expert:  Ash replied 1 year ago.

Correct. A Judge may consider it unfair.

After all why would you transfer a business and not get anything back? It just doesn't make sense

Does that clarify?

Customer: replied 1 year ago.
thank you . I appreciate your help in the matter.
Expert:  Ash replied 1 year ago.

If this answers your question could I invite you to rate my answer before you go today, otherwise the site doesn’t pay me for the time spent with you. Thanks in advance and good luck.

Ash and 2 other Law Specialists are ready to help you
Customer: replied 1 year ago.
No worries thank you, ***** *****
Expert:  Ash replied 1 year ago.

Good luck!