I have a hypotetical law and divorce question.

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Chibibar

Ok. I hope I give the whole scenario in full. My friend and I are not in agreement on certain things and maybe someone can shed some light on the subject. (We are using Texas laws)

Lets say person A and B are married and person B owns a business (but person A does all the work in the business)

Lets say person A give up all titles, assets, and anything relate to the business (including on going contract and clients relate to the business) to person B and start the divorce (i.e. sign over all of it)

Person A starts a NEW business and pursuit all the client including the one that has contract with the person B business.

Contract scenario: lets say it is a 6 month contract (5 month left) worth $50,000. Breaking contract will generate 10% penalty fee of the contract (in this case 5000$) now person B get the money from the contract breaker (5000$). Can Person B get the rest of the money from person A since person A agree to give all contracts to person B? (but person B lost mone in this case 45000$)
 
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Chibibar

My friend owns a business (which is under his wife's name) I told him that he should talk to his lawyers about division of property.

He felt that he took the clients (i.e make new contract with them for service and thus breaking the contract with the original company which his wife owns) that he doesn't owe her anything.

I said that in normal business practice, that is ok. BUT under division of property under divorce proceeding, it is a little trickier (so I believe) I am trying to get clarification (since giving the client a better deal and essentially force a money lost in future earning for his wife) (I use wife instead of ex since they are still married)
 
strawman

strawman

Sounds like he's trying to do something much worse. By "giving" her the business that generated the family income, he may have in mind that he can skip out on alimony. Then by stealing all his old clients back, he can then deprive her of that living.

Look, it's obvious this person is not operating in good faith, and in general the courts take a very dim view of people that attempt to pretend to follow the law and contracts but are clearly operating in violation of them.

I don't know enough of the laws to say anything, but that doesn't mean I won't pretend I do and do it anyway.

There is a big difference, when it comes to clients and contracting, between servicing customers who come to you once you've set up a new shop, and actively seeking out your old customers under your old company and getting them to switch. This is a known area of the law, because lots of partnerships fall apart, and there's always some question about whether the clients are stolen, or simply moving to where they feel most comfortable.

In general, if it can be shown that he contacted his ex-clients (rather than them searching them out) then it will be considered stealing them. Further, if it can be shown that he entered into the contract with the intent of stealing them, then the opposition may be able to throw the entire contract out - ie, the business will not have been considered to have transferred, penalty clause notwithstanding. this is particularly true if it can be shown that he operated the business and she would have been unlikely to be able to do so. If it can be shown that he didn't transfer critical business assets (such as the cell phone number used to contact clients, equipment, etc) then he may also be in trouble for stealing clients.

Quite frankly her lawyers should have told her not to enter into the contract without an agreement that either he not work in the same area or industry for a period of time, and they should have made the penalty clause equal to at least 1/2 the value of the business. The $5,000 is nothing. Maybe $5k per stolen client would be fine, I don't know what business they're in, but it's obvious that the wife entered into a terminally stupid contract.

Either way this guy is trying to stiff his business partner and wife every which way from tuesday, and he's a complete jerk and idiot for doing it and thinking he'll get away with it.
 
KCWM

KCWM

First Lady Puffinstuff said:
Sounds like he's trying to do something much worse. By "giving" her the business that generated the family income, he may have in mind that he can skip out on alimony. Then by stealing all his old clients back, he can then deprive her of that living.
Click to expand...
Isn't Chib in Fort Worth, Texas? If so, I'm pretty (95%) sure Texas doesn't have alimony.
 
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Chibibar

Actually there is alimony (at least what I found from Texas Law)
I did ask a friend who is a lawyer (general law really) who is really good with contract (his specialty)
technically, there is nothing wrong (his opinion) cause since the contracts do have liquidation liability on both sides (usually) so the wife (ex-wife) can only recover what was in the contract. BUT it all depends on what the judge say on the divorce settlement. That can change the outcome with above. So I guess I kinda get my answer.
 
sixpackshaker

sixpackshaker

The judge may not also look kindly on listing the wife as the owner of the company to "game" minority hiring rules in the state. That is the general reason for that type of set up. The husband has the connections, and the wife has the ability to get state contracts because being female is considered a minority business owner.
 
KCWM

KCWM

Interesting on the alimony bit. Sounds like there has to be some pretty interesting circumstances for alimony to occur in Texas. Not saying that a judge couldn't order it, but it does indeed sound rare. Good to know.
 
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