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If someone has a business and has a favor done to help out with the business, by a spouse, other relative, or just a friend. Can the favor-doer later-on sue the business owner for money for it?

I'm not referring to a case where there was some explicit implicit debt. This doesn't sound right, so I'll explain - I'm not referring to a case where the business owner says something like "I'll compensate you for it" or even "this is going to be good for you" or the like.

(If the answer is yes, my next question would be what does the business owner need to do to prevent this. A written contract? A simple letter by the favor doer? But I guess that should be a separate question later if the answer is yes.)

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    Depends on the favor... Was the favor "write a nice review online", or "lend me $50,000"?
    – Ron Beyer
    Jun 23 '20 at 21:35
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    @RonBeyer Not "lend me $50,000" of course. I would assume "lend" is quite explicit. Something like a design for a logo, but not by someone who does that for money, just someone who is more artistic.
    – ispiro
    Jun 23 '20 at 21:58
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    By the way, I'm aware of cases where somebody or some company sues even if they don't have a case, just to cause legal expenses. My personal opinion is that a friend would not do that.
    – Theraot
    Jun 25 '20 at 10:26
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In General

Generally speaking, applying common law principles, no. In the case of a relative or friend or neighbor or someone like that, doing a favor for a business does not create a legally enforceable right against a business or business owner.

Contract Claims

The question assumes that there is not true express contract, or even really a contract to pay compensation in some amount or by reference to some schedule of rates, that was implied in fact.

Unjust Enrichment Claims

One can still recover for service or benefit rendered under a claim of "unjust enrichment" in the absence of a contract. But, in contexts applicable here (also called "quantum meruit") there must be an expectation of payment communicated in a way clear to an objective observer of the situation to recover, as opposed to a gratuitous provision of service.

One classic case of unjust enrichment is when someone paints your house by accident, when they are actually under contract to paint your next door neighbor's house, and you know that they made the mistake but allow them to go forward expecting to be paid anyway.

Another classic case is one where services must be provided by a doctor or repairman or lawyer on an emergency basis and everyone knows that they were hired with an intent that you pay them, but the price could not be agreed upon because it was urgent to do the work immediately before working out the details of a contract to provide services. In these circumstances, the service provider is entitled to payment of the fair value of the services provided despite the lack of an express agreement regarding the amount.

In this example, however, there is not a clear expectation of payment that an objective outside observer would have been able to discern at that time the services were provided, so by default, the help provided was gratuitous, and not enforceable legally.

Special Considerations For Spouses

This general analysis also applies to a spouse, but not quite so strictly.

While the spouse couldn't sue for compensation or having a legally enforceable right to compensation, the extent of the help provided would be one factor among many that could be considered in determining an equitable division of property (in states that are not community property states) and an appropriate and equitable amount of alimony in states that do not have a fixed formula for determining this amount.

De minimus assistance would "come with the territory" and be part of a spouse's general right to an equitable division of property under a partnership theory of marriage.

But, more extreme labors not compensated in money during the marriage, such as personally building a barn on a farm, or working full time in a spouse's business for a prolonged time period without express money compensation, might have a value assigned to it that is considered in balancing each side's share in an equitable division, if one spouse is reaping the benefit of the other spouse's unpaid labor by receiving, for example, a working farm or business.

Similarly, in a fraudulent transfer case, it is possible that a payment to a spouse for extreme labors in the past of this kind would have a status similar to a payment for a pre-existing and not substantially contemporaneous debt. A spouse would be an insider. But, the transfer for no contemporaneous consideration might be considered safe from a fraudulent transfer attack after one year rather than the usual four year statute of limitations on fraudulent transfers.

Concluding Observation: Questions Of Proof.

Of course, all of this would be based when litigated on oral discussions and context limited by people's memories. This might make proof of a claim like this on the merits hard to win on at trial. But, it also makes disproving a claim prior to trial, when what happened is disputed, difficult.

Caveat For Intellectual Property Claims

I do not address the issue raised by a comment of designing a logo which raises legal issues specific to who owns intellectual property.

Sometimes the person who comes up with an idea is the default owner of the intellectual property rights associated with that idea, unless there is a written agreement to the contrary. This default rule usually applies even if the intellectual property was created with the intent that it be used by someone else.

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No.

This is a trivial example of how the intention to create legal relations doctrine works: in family/friends/social context there is presumption of no intention to create legal relations unless there are explicit proofs of existence of such intention (e.g. a written agreement).

Can the favor-doer later-on sue the business owner for money for it?

Anyone can sue anyone just by filing a statement of claim for a fee. But the case will be dismissed unless the favor-doer shows a proof of contract.

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Legally, no. Socially, the concepts of "you owe me one" and "calling in favors" are not to be underestimated. The kind of debt created by such constructs arises in contexts where there usually is significant interest in not letting relations deteriorate. Goodwill is predominantly not a legally tangible entity but still an important resource.

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"Something like a design for a logo, but not by someone who does that for money, just someone who is more artistic."

– ispiro

First, I am not a lawyer, and I do not give legal advice.

But business advice, I ran a consulting practice for years in the Database world. My advice is to pay for the work, and not to accept a favor, and to pay something like the worth of the work. My friend Cathy made a logo for my company when it was new, and it was beautiful, and it was a cashed-in favor. I paid her $50 for it, and gained the copyright. She would charge a Global 2000 company about $500 for a logo, but a normal client might get one for $300, and she's fast, so it only took about an hour of her time. When people make something for hire, it's yours if you paid for the labor, a work for hire, at least in the USA. Disney stars who write songs on spec and paid by hour or piece, do not own the songs, Disney does. Disney has fancy contracts to make sure, but if the creator is an employee working on work time, say, writing software or doing graphic art, the work is a work for hire and not a work the worker can hold copyright on. 1099 contractors should have a contract that specifies these things (use the phrase "all rights"), and people who create one item you pay for should agree to your ownership of the copyright, etc., for the price paid, or you've paid for nothing, since a logo is intangible, digital. Cathy's favor to me was the good price. I could have begged for it for free, but I didn't. People can sue (and win) if you paid way out of line for something worth way more (or less), because it amounts to a fraud, but a logo is not in that class of things, or it can look suspicious on your taxes, to be getting something of great worth for very little money, or vice versa. It might look like money laundering. So if your artist is a friend and an amateur, their work might be worth half or less of the going rate, and the payment makes you own the result, and if you have to deal with jealous ex-friends in the future, there it is in your business records, a cancelled check with their endorsement and a memo line saying "payment in full, all rights for XXX logo", and that check is your contract, saying you paid for the copyright. Always pay after, not before receiving the work, especially with friends, and never pay in cash. Have a backup plan if they back out, so there's no hard feelings. Also this way, your friend doesn't (or shouldn't) feel used. Best $25 you could spend. Buys a lot of insurance, for a little bit of money. So it's my philosophy to pay for everything, even if they're giving things away for free. Pay at least a token amount. You're in business, a pro, now. Pay for what comes in, bill for what goes out, inventory what stays. Sure, you can do business with a friend, but keep it clean and keep it professional. The person who is your friend today could be your boss in two years, your employee in ten, your business rival in 15, so don't burn your bridges. All of those relationships can be cordial, if you play it right, but doing business tests the mettle of people, and people who have been friendly may not turn out to be friends. Good luck with your business.

Maxx.

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    Welcome to StackExchange. We are big fans of paragraphs here, and not fans of walls of text. You need to hit return twice to get a new paragraph. Jun 25 '20 at 16:39
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I'm not a lawyer. This is not legal advice.

I'm a engineer, information security specialist. My specialization requires knowledge of legal aspects of handling information. Information such as a company logo.


If a person agrees to design a logo for you, and no fee was negotiated, such as would the case of favor... I would not expect that to hold as a agreement over which the friend can demand a payment.

However, I would not expect that to hold as a agreement to license the artistic work either. The author of the work, is the author of the work.

If the author turns out to be not so friendly, they might decide they want to claim their copyright, and attempt to take legal action. And you would not have paperwork to defend the claim that the author gave you permission to use the logo.

To prevent this, you want a license. A letter with handwritten signature where it says that you can use logo will do. A digital signature of a digital letter would work too, however, it is not clear if the author has the expertise to provide one. No, a scan of a handwritten signature does not have the same validity, you can slap one of those on anything with appropriate image manipulation software, that would not hold.

I would not be surprised if the author asks for payment in exchange for the license, which you would then have the opportunity to negotiate.


Yes, this is part of protecting the information assets of the company.

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  • Other things to consider here are works made for hire. In which case, the author would not have the copyright but the employer would.
    – Andrew
    Jun 29 '20 at 18:41

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