Question by : Can an One-Person LLC be sued for early contract termination?
I am a contract programmer and I use my one-person LLC. The LLC is registered in Delaware, but is actually based in Virginia. Currently, I am on a T&M (time and materials) contract for over two years. The contract is 6-month contract and gets renewed every 6 months (e.g. there are 6 month extensions). The contract is not very specific and simply states that my company (the Seller) is subcontracted to another company (the Buyer) for my software development services and all work is to be completed under the direction of the Buyer’s project manager. Of course, it states, the rate and the max amount I can bill within the 6 months period. I am paid by the hour. I am currently in the middle of 6 month extension (3 months into the extension). All was well, but things suddenly went bad on the project in the last month and several people left the team. My role was that of senior software engineer, but now I was “promoted” to be the technical manager/lead because the tech lead left the project. The problem is that I now have multiple new responsibilities and a lot on my shoulders. I can probably ask for a higher rate since I could argue I have more responsibility. Plus, they’re in no position to say no, since if I leave the project will be in even worse shape. However, I don’t want more money, I just want to leave and do something else. I’ve already been on this project for over 2 years and getting stale. I like to code and do creative work, but now I have multiple meetings to attend to, interact with the customer on daily basis, and even do some customer support. Fairly stressful, but boring stuff. I was planning to leave soon anyways – simply too long on this project and wanted to do something new, but I decided to stay for another 6 months b/c I liked working with the team members who all of a sudden left the team (really it was due to mismanagement of the project, they were not promoting/rewarding people who should have been). Anyhow, the situation now is dire, and I am facing a lot of stress and just really hating my life. I am the only contractor on the team and the team is pretty small. If I leave, the project is going to be in complete disarray – the company I subcontract to will likely lose their contract. Although, I know it’s their fault for mismanaging the team, I am afraid they will blame me and use me as a scapegoat, since I am the only subcontractor on the project. So, I am worried that if I find something else and quit early (even with 2-week notice), the company that I currently subcontract out with (and so far have had good relationship with – this is my third project with them), they may decide to sue my company for breach of contract? On one hand, I think it is possible, on the other hand, I am pretty sure this happens all the time. Do you think my LLC could be sued if I decide to quit the project a couple of months early? My role on the project has changed, so I feel it’s a little bit of a bait and switch. I was signing the 6 month extension with the assumption that I will keep doing what I was doing previously, but now they changed my role on the project and that comes with a lot of other responsibilities that I do not want to be dealing with.
Answer by –
What does being a LLC have to do with it? Breach of contract is breach of contract.
Your problem is the same one you’re displaying now — NOT HAVING A PROFESSIONAL INVOLVED.
You should of had an attorney go over the contract and help restructure it in your favor, so if something like this came up, you would have a way to terminate it early. Also the filing the LLC in Nevada thing, also tells me that you didn’t talk to a business attorney or CPA ahead of time.
Pay the 1-2 hours, or take advantage of a free consultation, and talk to a business attorney. Have him look over the contract and your situation. He may be able to get you out of it. Otherwise, finish the what’s left of this last 6 months, and don’t renew it.
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