Legal

Ask a lawyer and get answers to your legal questions

Ask a Lawyer,
Get an Answer ASAP!

This answer was rated:

Im reviewing a contract to be an independent contractor to…

I'm reviewing a contract to...
I'm reviewing a contract to be an independent contractor to market a product, There is no fee or buy in for the opportunity and I get a protected territory. The business builds over lots of time, 3 years to a good income level and there are residuals paid for each customer that was procured during the contract period which has no time limit. Once business starts to come in it should grow exponentially, the opportunity is presented as an asset and can be sold or assigned. So it's like my own business. Question is there is a termination clause for any or no reason and also a clause for cause, it seems to me I could build the business to a good income level and then they could terminate for no reason where I would still receive residuals for whomever signed up while I had the contract but future business would just become house business for the company and they won't have to pay me forthe momentum of what I built. Is this just a standard in contracts and I shouldn't be concerned?
Show More
Show Less
Ask Your Own Legal Question
Answered in 12 minutes by:
1/5/2013
socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 39,768
Experience: Retired
Verified
Question is there is a termination clause for any or no reason and also a clause for cause, it seems to me I could build the business to a good income level and then they could terminate for no reason where I would still receive residuals for whomever signed up while I had the contract but future business would just become house business for the company and they won't have to pay me for the momentum of what I built. Is this just a standard in contracts and I shouldn't be concerned?

A: It's actually about as "nonstandard" as a contract can get. An "at-will" contract is almost always an attempt to avoid the employment laws by pretending to treat an individual as an independent contractor, even though the state and federal government would almost certainly deem the contract an employment contract.

However, the residual deal is interesting, assuming that it's generous enough. The trouble with such agreements is that once you are cut off from the parent company, trying to audit the books becomes an exercise in futility. You end up having to sue, the business stalls forever, meanwhile you have no revenue stream, so you're out of pocket for your attorney's fees and you could wait for several years for a judgment that you can collect on. Meanwhile the business, which has had similar dealings with other contractors, files for bankruptcy and you find out that the business has been insolvent forever, and you have no means of recovering your attorney's fees and costs of suit.

I'm really not trying to convince you that this is a bad deal -- I really don't know.

What I do know is that most of the time, these deals are only good when you generating current revenue, and the idea that they are a long-term solution is almost always an illusion.

The only way to know that the parent company is solvent enough to do this deal over the long term, is if they give you a surety bond for your likely profits and recalculate the bond, at least annually. And, if you can get the parent company to do that, then you will be the only person who has ever accomplished that, because it means that the parent must have a lot of cash on hand in order to pay its debts -- and, these types of deals just never have that sort of risk protection.

BotXXXXX XXXXXne, if you do the deal, think of it as a job with no future once something goes wrong -- because that's almost certainly what it will turn out to be.

Hope this helps.
Ask Your Own Legal Question
Customer reply replied 5 years ago
Interesting... So lets say this really took off and there was lost of success financially, could they succeed if they terminated for no reason to just take it away and continue to benefit from what I built? The residuals could be a decent amount of money but its 7+ years to build that up. I understand they are protecting themselves if the business doesn't work. I'm willing to take the risk because I believe in the product but would a court really let them terminate contract if it was so many years later and I built the territory to be successful, like they can take the business I built for themselves?
If you have an "at will" contract, then there is nothing to stop them from terminating the deal at will. The residual provision is what would validate the deal for the court, because while you're being cut off from new revenue, you retain the value of the good will you already built, as long as the former customers/clients continue to purchase.

Maybe they won't want to take the business away. But, if for some reason, another "partner" gets bigger, faster than you, and he/she wants your territory, then the parent may consolidate you right out of the deal. That's probably the biggest risk.

Hope this helps.
Ask Your Own Legal Question
Customer reply replied 5 years ago
Is it a correct assumption that in the insurance world this s just the way it is and if its a great company and I succeed that it isn't an issue? Like you said these types of deals don't have risk protection. They claim total transparency and other partners rave about hat a great company it is. So if one territory partner gets a raw deal the others would certainly hear about it, like being consolidated out..l I'd think that would be bad for business.
If this is State Farm, Allstate, Farmers, etc., then they have a history of these types of arrangements, and you know they work for the most part. But, if it's some other company that doesn't have that sort of reputation for independent field offices, then all I can say is "caveat emptor."

Best wishes.
socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 39,768
Experience: Retired
Verified
socrateaser and 87 other Legal Specialists are ready to help you
Ask your own question now
Was this answer helpful?
Ask socrateaser Your Own Question
socrateaser
socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 39,768
39,768 Satisfied Customers
Experience: Retired

socrateaser is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Not only did he answer my Michigan divorce question but was also able to help me out with it, too. I have since won my legal case on this matter and thank you so much for it.

LeeMichigan

< Previous | Next >

Meet the Experts:

Tina

Tina

Lawyer

8,775 satisfied customers

JD, BBA Over 25 years legal and business experience.

Ely

Ely

Counselor at Law

24,353 satisfied customers

Private practice with focus on family, criminal, PI, consumer protection, and business consultation.

INFOLAWYER

INFOLAWYER

Attorney

20,727 satisfied customers

Licensed attorney helping individuals and businesses

JPEsq

JPEsq

Attorney

2,132 satisfied customers

Experience as general attorney, in house counsel, SSDI, Family Law attorney, and law professor

Law Educator, Esq.

Law Educator, Esq.

Attorney

42,358 satisfied customers

JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law

Ellen

Ellen

Lawyer, Consultant

8,238 satisfied customers

25 years of experience helping people like you.

Guillermo J. Senmartin, Esq.

Guillermo J. Senmartin, Esq.

Attorney

292 satisfied customers

7+ years of experience handling various legal matters.

< Previous | Next >

Related Legal Questions
I'm 58 years old and female. I have an employment contract
I'm 58 years old and female. I have an employment contract that says I will work at least 30 hours per week through June 2019. Friday, my boss told me they have hired my replacement and they want me t… read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
10,187 satisfied customers
We are attempting to write employment contracts for our
We are attempting to write employment contracts for our summer staff and need advise about how best to structure base wages and bonuses for attendance performance and fulfilment of the contracts which… read more
DanLegal
DanLegal
Law Partner
Juris Doctor
314 satisfied customers
I have an employment contract and want to leave the job. Is
Hello, I have an employment contract and want to leave the job. Is it possible without any penalties? … read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
10,187 satisfied customers
I am looking for advice on my employment contract. I have
I am looking for advice on my ***** ***** employment contract. I have been paid by the firm to receive my securities licenses, but want to use them elsewhere. Contract states that once I receive my "c… read more
Michael Bradley
Michael Bradley
JD
1,371 satisfied customers
I have a question about my employment contract. At will.
I have a question about my employment contract. JA: Have you documented this or discussed it with HR? Customer: Yes JA: Is the employment agreement "at will," union, full time or part time? Customer: … read more
Bill Attorney
Bill Attorney
law
2,039 satisfied customers
I have a question about an employment contract that I'm
I have a question about an employment contract that I'm currently in in Maryland. More specifically, I need to know if the stipulations for terminating the contract prior to the 3 months notice is enf… read more
Edward Young
Edward Young
Juris Doctor
340 satisfied customers
I have a question regarding my employment contract. Do I
Goodafternoon,I have a question regarding my employment contract. Do I have to give 90 days notice if the contract says, employee may be terminated: (i) at will by either party with 90 days notice,(ii… read more
RobertJDFL
RobertJDFL
Attorney
Juris Doctorate
5 satisfied customers
Question about no compete employment contract. Georgia
question about no compete employment contract JA: What state are you in? It matters because laws vary by location. Customer: Georgia JA: Has anything been filed or reported? Customer: no JA: Anything … read more
Ray
Ray
Lawyer
Doctoral Degree
32,117 satisfied customers
An out of state corporation breached my employment contract.
An out of state corporation breached my employment contract. … read more
Lori
Lori
Juris Doctor
1,076 satisfied customers
I need someone to review a consultant contract for insurance
I need someone to review a consultant contract for insurance adjusting. … read more
Ray
Ray
Lawyer
Doctoral Degree
32,117 satisfied customers
I have a question about perdiem on an employment contract. I
I have a question about perdiem on an employment contract. I have a contract that spell out that I will get a per diem breakout of my check as I am on business travel.I got am email from the contract … read more
LegalGems
LegalGems
Juris Doctorate
11,587 satisfied customers
If I change my permanent life insurance contract with cash
If I change my permanent life insurance contract with cash value to either a paid up extended term contract or a reduced paid up contract using the cash value - would this contract be exempt from Medi… read more
Law Educator, Esq.
Law Educator, Esq.
Attorney
Doctoral Degree
42,358 satisfied customers
If we file a caveat / objection to the will of a family
If we file a caveat / objection to the will of a family member being probated...the next step is a hearing right? How long will it take for the hearing to take place??? … read more
INFOLAWYER
INFOLAWYER
Attorney
Doctoral Degree
20,727 satisfied customers
Is this legal to write in an employment contract? The
Is this legal to write in an employment contract? The Employee shall work Monday to Friday, from 9am to 1pm CST and shall be compensated for time that is clocked in, until additional clients are assig… read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
10,187 satisfied customers
Would an offer of employment contract outweigh the formation
Would an offer of employment contract outweigh the formation of an ad hoc committee designed to replace current administration? The board runs under the California Brown Act. … read more
Law Educator, Esq.
Law Educator, Esq.
Attorney
Doctoral Degree
42,358 satisfied customers
I have an employment contract in. There was no specified
I have an employment contract in Virginia. There was no specified length for the contract. I am wondering how long it is valid for. I signed it in April 2016 for a job starting in July 2016, and have … read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
10,187 satisfied customers
I have a question about an employment contract between
I have a question about an employment contract between myself and an LLC … read more
Taylor
Taylor
Attorney
Juris Doctor
214 satisfied customers
I have an employement contract which i signed 1 month ago,
Hi i have an employement contract which i signed 1 month ago … read more
LawTalk
LawTalk
Attorney at Law
Juris Doctor
128 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x