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Category: Canada Law
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Our company retained a sales individual, who billed the company

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Our company retained a sales individual, who billed the company monthly for "Services" and separately, billed and provided "Advances against future commissions". A sales agreement was drafted but never executed. The company no longer retains this individual and we are unclear, without a contract in place, whether or not the individual is responsible for repaying the advances?

Thank you.

Yes, the individual should repay. Even without a contract, if tis person fails to repay, the company could take legal action against him, basing this on the equitable doctrine of unjust enrichment. That is where one party is benefited, the other is deprived of that amount of the benefit, and there is no valid legal reason to allow that state of affairs. The court can then rule that the money paid is held basically in trust by the person and is to be repaid to the company.

If this employee did any work that would benefit the company towards realizing some future commission, then he would be entitled to keep the value of that work. So for example if he had done 30 hours work to line up a sale but it had just not been closed at the time he left, a court would try to determine the value of his work that he was not yet compensated for, and could deduct that from the amount that is repayable.
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