Kaitlin and Nick Common Facts for all Parties

Kaitlin and Nick met as casual teachers at the local primary school 8 years ago. Both were qualified computing and mathematics teachers who were unable to find a job in a high school. In order to retain their skills, the two teachers met weekly to devise mathematical and computing problems for each other. Together they developed a game app using mathematical formulas. Their app was a commercial success.

The two teachers decided to give up casual teaching and form a computer software business specialising in educational games and apps. They contributed equally to renting premises, hiring a receptionist/secretary and purchasing the best computers for game design. They agreed to develop further apps and software packages and market these with copyright to be shared and all profits and costs to be shared equally. A partnership agreement was drawn up and signed by both of them. The major relevant term is that the partnership can only be dissolved by agreement or court order. The agreement also notes that all assets and liabilities, will be split 50/50 upon dissolution.

As the business developed, each tended to specialise - Kaitlin on creating further programs, and Nick on marketing. Nick also has his own side business in which Kaitlin has no interest. This side business is the provision of computer literacy courses to parents who wish to keep pace with their children's computer skills and who wish to obtain the knowledge to evaluate appropriate educational programs for their children.

In recent months, there has been a lot of tension within the partnership and Kaitlin has just announced that she wishes to leave the business to work overseas. Nick wishes the partnership to continue but would like an adjustment to the sharing of profits going forward. He realizes that Kaitlin will obtain a court order to dissolve the partnership if no agreement is reached. They aren't really interested in talking with each other at the moment, so have agreed that their individual lawyers will meet to try to negotiate a solution to this standoff.

Confidential Facts for Kaitlin's Lawyer - Kaitlin's Statement

I enjoyed my studies at university to become a high school teacher in mathematics and computing and was very frustrated when no jobs were available at the conclusion of my studies. In desperation, I agreed to do casual teaching to primary school students and taught computing, mathematics as well as other subjects in which I had little training. While a casual teacher, I met Nick who was in the same position. We quickly formed a friendship and I enjoyed our Friday afternoon sessions, where I tried to stump Nick by creating mathematical problems, which he could not answer.

I continued to tinker at programming with my small computer at home. As part of our teaching aids, the two of us developed a game app based on mathematical formulas and were surprised when it seemed very successful at school and the older students liked it as well. We were both really surprised when our app became a success on the app store. Mostly it was my efforts in designing the app, as Nick's computer was broken at the time. I did bounce ideas off him, so he did help and I have always thought of us as partners.

About 5 years ago, Nick and I agreed to set up our own computer software and app business to market educational programs especially in the science areas as there did not seem to be anyone with expertise in the market.

I have worked very hard since formation of the business. I had no idea how much time and effort were needed to stock, maintain and run a software business as well as keeping up developing new apps. But the whole experience has been valuable, as I have developed new business skills to complement my computer skills. Unfortunately, I have less time than I would like to work on my own programs. I often have to stay late at work as it is easier when there are no interruptions. About 3 years ago, we agreed that I should spend more time on developing programs while Nick marketed the business. Nick's side business in developing computer courses for parents has also taken off well. I am not sure where he finds the time and I suspect that he is spending more time on that, than marketing our own business.

I have now hit on a new idea for a program and am sure it will be successful. However, it needs many hundreds of hours of fine-tuning. In fact, this new idea has been so time consuming that I haven't been able to release any new apps for the last 12 months. Although I have released updates for our current suite of programs and apps I have recently been offered the opportunity to use the computers at UCLA in California and think this would be a marvellous enhancement of my skills to develop this new idea. I also feel that the future of the business is probably in my hands as Nick no longer writes programs and is somewhat out of touch with modern programming techniques. I wish therefore to take a break from the business, take some of the profits out of the business (about $200,000 but absolutely no less than $100,000) and spend one to two years in California. There are about $250,000 in profits in our business bank account that we have accrued over the last 12 months. We had retained that amount, as we were still to decide where to invest this money to expand our business with more staff etc.

I would prefer not to break up our partnership but if it has to happen then I am OK with it. I realise that it may be a painful process to break up the partnership as Nick will not agree and that a court order will have to be sought. I really want to take this opportunity to develop my skills at UCLA.

If pressed, and assuming the partnership remains, I would consider taking a reduced percentage of profits during the time I am in California. I have no doubt I will still be updating the suites of programs and apps though I am uncertain how much of that I can do while away. When I have developed successful programs and return to the business, I would expect an increased percentage of profits.

Nick has also raised the possibility of including his wife in the partnership but I think she is just a sponge and can contribute no useful skills. But I suppose it really comes down to money.

You have been instructed to represent Kaitlin in negotiating with Nick's lawyer and to find a way through "this mess" as Kaitlin calls it.

You can assume that your client is easily accessible to obtain further instructions if they are needed. You can assume that your client will authorise any proposal you negotiate, as long as it is consistent with these general instructions.