I hired a business manager to help me streamline my business. Instead, she ruined my business. Is this breach of contract?

Asked over 1 year ago - Kirkland, WA

hired bm 6 months ago. she tried to turn my pilates studio into a physical therapy studio and when i would not get on board with her vision she pulled out. before she l she upset the staff, and made so many messes for me to clean up. one of my instructors left abruptly because of the tense atmosphere and took 10 clients. (5k rev loss) to another studio. all of these things combined has left me having to close. i feel scammed. she was supposed to be a consultant to streamlined my business, not change it. i realize i have some responsibility in being so trusting and not catching it sooner. do i have recourse with getting some of my money back? she's also trying to renew her american citizenship because she was living in australia most of her life childhood?

Attorney answers (4)

  1. Donald John-Mark Kenney

    Pro

    Contributor Level 9

    2

    Lawyers agree

    Answered . You are confronted with a potentially complicated situation that may have a host of legal issues. If you had a written agreement with this person, then you should have an attorney review this agreement to see if she breached it. If the agreement was verbal, then it may be difficult to prove some sort of breach of contract vice a personality conflict. Did she slander you? In other words, did she say false things to staff and clients about you that caused you economic harm? Was she negligent in the performance of her duties causing economic harm to you? Did she intentionally interfere with your employee and client relationships, thus causing damages? These are just many of the questions a qualified attorney would ask you to get to the bottom of the question of whether you have a case or not. I strongly encourage you to consult with a qualified attorney about this.

  2. Benjamin T G Nivison

    Contributor Level 12

    2

    Lawyers agree

    Answered . The terms of your contract will govern the scope of the duty that she owed you in the context of this consulting relationship. So if you have a written contract, look at the language describing what exactly it is that this consultant was agreeing to do. If she did not perform those functions, or if she performed them inadequately, you may have a claim. This analysis is of course easiest to accomplish with the assistance of a lawyer, but you should be able to get a good sense of the nature of her promises to you in the meantime, and without the expense of engaging an attorney. If you can't sort it out, you can sit down with a commercial litigation attorney to help you understand the range of your rights. If you had only an oral contract, then you will have a much more difficult time.

    In fact, even if you have a written contract, I suspect that it is unlikely that her duties under that document would be broad enough to have her be on the hook for the change in your business outlook. This is especially so if you signed off on some of those changes. Similarly, you probably would have a difficult time establishing that her consulting work under any contract was the cause of lost revenue for your business, or the cause of the loss of an instructor relationship as you describe. But there are ways that a contract could be structured to give rise to such responsibility; the answer definitely does depend on the terms of the contract.

    Regarding the citizenship point, that is probably a non-issue for your contract claim. Or are you suggesting that her foreign or naturalized status caused you some harm? If there is a problem with her working or paying taxes in the United States, then that is a different question, especially if you paid or employed her knowing of her status in that respect. It is difficult to tell from the information you share whether this is an issue for you, but if you suspect it is, you should consult with a business or immigration attorney to discuss it further.

    Good luck!

    Benjamin Nivison is an attorney licensed to practice law in Washington State. This communication does not create... more
  3. Seann C Colgan

    Contributor Level 2

    2

    Lawyers agree

    Answered . Hi. Sounds like you have a few different questions here, but what you really want to know is this: can you get back the money you paid to your former business manager?

    First, you’ve asked about breach of contract. The law says you can sue, and possibly get your money back, if your former BM breached a “material” term of the contract. To figure out whether something is a material term, or not, it helps to understand that a contract is an exchange of promises. A “material” term is a contractual promise that is so important that if one party to the contract breaches it, the other party doesn’t get what they bargained for. So, for example, if your contract required the BM to work 20 hours per week, and she only worked 10, that’s a material breach.

    To determine whether you might have a material breach, look over the terms of your contract and ask yourself two questions: (1) Did she do what she promised to do?; and (2) If not, did you lose any money because she didn’t do what she promised to do? If you can answer yes to both of those questions, then you might have a breach of contract claim, and it could be worth talking to a lawyer. (If you don’t have a written contract, but only an oral agreement, you may still be able to sue but it would be much harder because you would need to prove the terms of the agreement.)

    Second, you may have claims other than breach of contract. For instance, did she defraud you in any way by, for example, stealing or paying herself more than you’d agreed? Also, if she steered potential clients away from your studio and towards a competitor, you might be able to sue for lost business – depending on the terms of your contract. Other claims are possible, depending on the facts.

    The most useful way for you to think about this issue right now is probably this: did your former BM cheat you in some way, or was she just bad at her job? If she cheated you, then you probably have a basis to sue her. If she was just bad at her job, you probably don’t. If you’re unsure, then it may be worth seeking out an attorney and getting an initial consultation. The other thing to think about before you go down that road, however, is this: if you sue your BM (which will cost money), and you win, does she have the money to pay you? People who can’t afford to pay are generally not worth suing.

    Lastly, you write that your former BM is “trying to renew her American citizenship.” That shouldn’t have any effect on the issues you’ve outlined.

    This communication does not create an attorney-client relationship and does not constitute legal advice. The... more
  4. Rixon Charles Rafter III

    Contributor Level 20

    1

    Lawyer agrees

    Answered . Depends entirely on what your contract with her says.

    NOT LEGAL ADVICE. FOR EDUCATION AND INFORMATION ONLY. Mr. Rafter is licensed to practice in the Commonwealth of... more

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