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Chris T., JD
Chris T., JD, Attorney
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I am being sued by a fellow sales rep who is alleging that

Customer Question

I am being sued by a fellow sales rep who is alleging that we are business partners. I have worked for the same manufacturer for over 20 years. I am a 1099 independent sales contractor. 6 years ago I asked the CEO of the manufacturing company if we could bring another independent rep to help with a large acct I opened. He agreed and after a falling out resulting from many issues including a alcohol problem, it was decided to terminate her. We worked jointly on the accountant and shared commissions. The manufacturer paid each of us every month directly. We had no joint bank accounts, did not file 1065s or K1 and she filed in the state of Washington as a sole proprietor. The manufacturer paid and invested millions in marketing and other expenses on the acct although she and I did split fuel and traveling expenses when traveling together. How can I prove that we never entered into any business partnership and were only paid wages in the form of commissions from the manufacturer? I have asked this question before but looking for more opinions
Submitted: 1 year ago.
Category: Legal
Expert:  Chris T., JD replied 1 year ago.

TexLawyer :

Good evening. I'll be assisting you with your question.

TexLawyer :

Ultimately, you don't have to prove that you weren't in a business relationship; she has to prove that you were.

TexLawyer :

Without a written agreement or some testimony that you had a verbal agreement, I don't see a way she could win, based on what you've told me.

Customer: What would she need to win?
TexLawyer :

She would need either a written contract or some testimony that you verbally intended to form a partnership (even with testimony that there was a verbal agreement, she would still have a difficult case).

Customer: Are commissions shared on a acct that we worked on for a manufacturer shared profits from a partnership? Can they be seen as this ?
TexLawyer :

Under normal circumstances, yes, but the partnership agreement would spell all of that out. Absent a partnership agreement or some contract binding the two of you together, she would have a difficult - if not impossible - time making a claim to the profits.

Customer: wouldn't the manufacturer we worked with have paid a partnership if there was one? They paid us independently. She alleges that because we worked on the account together there is a implied partnership
TexLawyer :

Correct. If you had a partnership, the manufacturer would have written a check to A&B Partnership, or whatever you would have been called. The fact that they paid you separately is very strong evidence in your favor. If need be, you could call someone from the company to testify to that fact.

TexLawyer :

Based on what you've told me, I can't see any reason that a court would find that a partnership existed.

Customer: Ok. Have you seen other cases like this?
TexLawyer :

Yes, I've seen cases where someone attempted to go back and say the parties intended to enter into a partnership, but never got around to signing the paperwork. Even then, a judge found that none existed. You are in a better position than that.

Customer: She has filed a 3.5 mil lawsuit. I'm frightened as I would never be able to pay it. We never had any partnership agreement but I've heard lawsuits are sometimes lost when all facts are in your favor
TexLawyer :

In this case, she has neither the law or facts on her side. The only way she could win, based on the facts as you've described them, is if you fail to show up and defend yourself, in which case she would get a default judgment.

TexLawyer :

Also, if a judge simply ignored the law and awarded her the money anyway, you would have a strong case on appeal.

TexLawyer :

Obviously, nobody can guarantee anything, but, simply put, her case is very, very weak.

Customer: Thanks for your time
TexLawyer :

Glad to help. If I can't do anything else for you, please remember to "rate" my answer. Have a great evening.

TexLawyer :

Can I do anything else for you?

Chris T., JD, Attorney
Category: Legal
Satisfied Customers: 3873
Experience: Experienced in both state and federal court.
Chris T., JD and 4 other Legal Specialists are ready to help you
Customer: replied 1 year ago.
Do you know of any case law to support my case ?

Thanks
Expert:  Chris T., JD replied 1 year ago.
Here are a couple I've found:
http://wa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20040412_0000466.WA.htm/qx - This case talks about the issue of shared profits in a partnership. In order for a court to imply that a parnership existed absent a formal agreement, one of the major factors a judge should consider is whether or not the parties agreed to split the profits. Here, you did not agree to do that since you were paid seperately.

Here is another case, Cusick v. Phillippi
http://www.leagle.com/xmlResult.aspx?page=4&xmldoc=198518942WnApp147_1162.xml&docbase=CSLWAR1-1950-1985&SizeDisp=7
It says: "The essential test of the existence of a partnership is whether the parties intended to establish such a relation as manifested by their express agreement or inferred from their acts and statements." In your case, you and this other person never intended to establish a partnership, i.e., you never set up joint accounts, never told one another you wanted to be in a partnership, you were paid seperately, and you filed sepearte taxes. I can't see how she is going to prove that you intended a partnership. She has very little, if anything, on her side.

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Chris T., JD
Chris T., JD
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Experienced in both state and federal court.