legal, financingLet Will and Jack be the main protagonists. Will is a young graduate in biological sciences no work experience with no technical skills. Jack has four years of software engineering experience on top of a master’s degree in the field of the startup. Note that there have never been any signed agreement between Will and Jack and that the story takes place in the United Kingdom.
Jack spent a ten weeks full time on the project, iterating several prototypes, calling potential clients, etc. while Will was part time (less than 20 hours a week). The not-yet-incorporated company got selected for a for-fee accelerator program (£720) six weeks after Jack started being full time. Jack paid 40% price of the four-month long program, as he was guarantee 40% of equity. In addition, Jack lived far away from said program, and incurred an additional cost of about £130 per week to travel there.
A month into the program, Will and Jack split. Will continues the program and the company. Jack retreats to his initial location and no longer attends nor participates in any activity of the program. Will also asserts that Jack no longer owns any equity in the company. However, until the end of the program, Jack continues to pay the small monthly fee for the Google Apps (about £10/month).
Is Will legally bound to reimburse Jack the price he paid for the accelerator program and for the incurring expenses? Or, on the contrary, can Will simply state all the expenses incurred by Jack were just poor investment on his part, and the total of £328 company expenses plus £720 of travel should be considered pure loss? In addition, can Jack’s work on this startup be used without any compensation?
Unfortunately as I understand there was no legal entity the two shared or share at the moments, in a legal perspective it’d be difficult if not near impossible to get reimbursed for Jacks expenses.
On an ethical perspective, yes ofcourse Jack should be reimbursed, but The legal expenses for a ‘iffy’ reimbuirsment case would unfortunately not make sense.
Jack should invoice Will or the company for reimbuirsment, and can bluff that if not paid he has legal rights for the reimbuirment of expenses made in favour of a company Will now has, and hope for the best.
The best approach would be to discuss the situation and find common ground. Jack may also be interested in getting an equity share for his work and financing, that Will would see reasonable. (5-10% if Jacks input was base for founding the company and will no longer be part of the company. However it he company has high foreseeable income, this percentage could be a lot smaller, but enough to cover the costs and labour within the first 1-2 years)
(Sorry, not enough rep for comment)
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