Can a business partnership exist without a contract?

[digitalgirl]

And can one person in the implicit 'partnership' claim money from the other for earning money under the implied 'partnership' name?

My friend was in a band with two other members. There was no partnership agreement written up. They performed together and earned money under the band name. One member wasn't pulling their weight so they kicked them out and replaced them. They have continued to perform under same band name with a new member and earn money. Ex-member has gone to solicitors to claim for either a third of all profits from 'partnership' or force them to change their band name. Their bandname is fairly important to them as it's established and gets them work.

Can ex-member claim for money in a partnership where there is no written agreement between the 'partnership' members? If so, could my friend set up a ltd company as the bandname and operate under that so the 'partnership' is effectively dissolved?

Unfortunately disputes over use of a band's name when they split up are common and can be very messy.

In the absence of a partnership agreement or similar the name belongs equally to all members of the original band. The ex-member therefore has as much right to the name as the remaining members. However, claiming one third of the profits when he is no longer a member of the group is pushing it a bit and I doubt he would get that much. On the other hand the ex-member is entitled to set up his own band using the same name which would really confuse matters.

Just to add to the fun, in the absence of any written agreements it is possible that the new member may be able to claim part ownership of the name.

Forming a limited company wouldn't resolve the issue. The limited company would have no rights to the name unless it bought those rights from the current owners (i.e. the existing members plus the ex-member). The company could, potentially, face a "passing off" action from the ex-member.

Thanks for that!

So essentially they need to change the name, or pay off ex-member?

btw - they're not worried that ex-member will start new band using same name as ex-member was the least talented of the three.

During their time together if ex-member wasn't available for a show the promoters didn't care and were happy to book the gig, but if my friend wasn't available for a show there was no show. So quite often ex-member got paid for being 'off-sick', but if my friend was ever off-sick then no-one got paid.

Would this count for something in helping to discount the ex-members involvement in the partnership?

His lack of contribution may help but there is no guarantee. Your friend could try fighting the ex-member on this basis but there is no telling what the courts would make of it. They might decide the ex-member isn't entitled to anything other than free use of the name, or they might decide that the fact he was paid when he didn't perform counted in his favour as far as this case is concerned. The courts are always a bit of a lottery with this kind of thing so you really want to head this off before it goes that far.

The simplest approach would be, as you say, to either change the name (with plenty of publicity this could actually be made into a positive thing) or pay him off. Whatever the band do to sort this out, I would recommend getting some form of agreement in place covering the current members so that they don't hit further problems in future.

I would also recommend taking proper legal advice before doing anything. It may be there is some important point we are missing here. In any case, you want any pay off to be dealt with in a way that ensures the ex-member won't try coming back for more.