QLD Contract Law - Bought Business from Employer - Who Owns the Business?

[Norman]

Hello. Just to describe the matter in few lines:

A small business owner employed me in 2013 July on $45,000/annum salary on full time basis as store manager, then after few weeks he offered me to buy the business for $25,000 which I agreed and paid $16000 to him and promised to pay $9000 after some months which we both have in writing, and then I started working 7 days a week with at least 14-16 hrs a day and invested all my profits into the business for buying more stock and improving the business.

Starting of the 2014 till now he has become greedy for money and I have paid him $36,600 till now and he is asking for more $10,000 to transfer the store to me. It's really making me sick of him because I haven’t got paid anything from last 2013, no tax, no superannuation, no wages, working around 100hrs/week and using my profits to run the store. It's time to get legal against him as I cannot bare it more. Please guide me on these areas.

(1) Who will be the owner of the store under contract law after that written agreement in 2013 which he clearly says he has sold the business?

(2) If he will be the owner then I have to get my almost 2 years of wages for around 100'hrs week+ my taxes+my Super.

(3) Because I was assuming it's my business I have spend $50,000 in two years to keep the business active and improving and I am in debt now.

Please guide me.

Thanks

 

[Sophea]

Hi Norman,

It all depends on what the written contract says about the sale of the business. When does it say that the business was supposed to be transferred to you? Who has physical control of the business accounts, the premises and who takes the profits etc?

It sounds as though you would be entitled to some relief under contract law or principals of equity however you may be better off seeking some specific advice from a lawyer.

 

[Norman]

Hi Norman,

It all depends on what the written contract says about the sale of the business. When does it say that the business was supposed to be transferred to you? Who has physical control of the business accounts, the premises and who takes the profits etc?

It sounds as though you would be entitled to some relief under contract law or principals of equity however you may be better off seeking some specific advice from a lawyer.

Hi Sophea, thanks alot for your reply. the written agreement clearly says, from the date loss and profit of the business goes to me and the previous owner has no right on the business. agreement has signatures with photo id and a witness, however it was made by me and not by a lawyer. will that be still valid?

I have worked 7 days a week more than 100 hrs a week for this business and invested another 50 grands and paying interest from last 2 years in hope it will get better in future. Just to remind you i was hired as a store manager full timem he choose to leave the business or pay me wages for the amount i have worked because since that day he has left the state and started working in NSW.

 

[Sophea]

Why does the former owner still have anything to do with the business then? And why have you paid him $36,600 if you only contracted to buy the business for $25,000?

 

[Norman]

Why does the former owner still have anything to do with the business then? And why have you paid him $36,600 if you only contracted to buy the business for $25,000?

at first he borrowed money from me saying he will return it and then when i asked the money back he said that money is from the business and you are making heaps of money because of this business, still i kept quite but now when i said to atleast transfer the business now he sent me a new unsigned contract from his accountant's email saying that business price is $46,600 in total with goodwill, and i have received $36.600 and now i need to get $10,000 to complete the sale.

Really now i am sick of him. and would not hesitate to take him to court and claim my money back with 2 years of wages+tax+super+overtime+harrasment. because he made my life hell from last two years and i had get just food from store without any wages from last two years and now i am in debt of $80.000 on my credit card and personal loans used for business with proofs.

 

[Rod]

DO NOT SIGN the second agreement.

Based on your side of the story - Stick with the first contract and demand your loan money back. He is making a claim to avoid repaying you. I suspect the former owner has 'sized you up', believes you are an easy target and can make more money from you. Unless you make a stand now you will lose more money.

You need assistance to get of this mess if you are not confident of doing it yourself. You do not necessarily need a lawyer at this stage as someone with good business sense may be able to help you.

Gather all your paperwork and correspondence with the former owner and seek help asap. This forum cannot provide the kind of specific advice you need.

 

[Norman]

Thanks Alot Rod, and yes i have all the correspondence till now and clearly shows his greed , can you guide me in a direction where do i start from ? Go to the commercial litigation help or straight away get help from Faiwork Australia and ask for my two years wages for 7 days a week and super+ and my loan money which i spend on business with proof?

 

[Rod]

It is unlikely you can go to Fairwork Australia as there is no employment agreement covering the 2 years post date of first contract.

Get someone experienced in commercial business contracts as a starting point. Maybe a commercial lawyer, but doesn't have to be. An experienced business mentor can get you started before you start incurring legal expenses. Possibly someone local who does business coaching can get you started. A commercial lawyer may be the best option, but they tend to be expensive hence my other recommendation.

 

[Norman]

It is unlikely you can go to Fairwork Australia as there is no employment agreement covering the 2 years post date of first contract.

Get someone experienced in commercial business contracts as a starting point. Maybe a commercial lawyer, but doesn't have to be. An experienced business mentor can get you started before you start incurring legal expenses. Possibly someone local who does business coaching can get you started. A commercial lawyer may be the best option, but they tend to be expensive hence my other recommendation.

I still have the first 1 year contract from july2013, then the renewed one which expires this month, he was showing that he was paying $45,000 with super in his BAS what i have seen it to reduce his profits,

 

[Rod]

The weakness in the employee scenario is that you did not behave as an employee (didn't ask for pay, paid business expenses yourself, presumably did your BAS etc) so it may not work out as you hope.

Get someone local to help you.