What do I do when my investor breaks our contract? 😰

Hey there,

OpenAI restructure? Breached contracts? Networking? It’s all in today's newsletter. And as always, everything we’re sharing with you is designed to grow your business smarter and faster. 

So today we’re:

1. 🙋‍♀️ Answering the one legal question we’ve been asked most this past month by founders and startups.

2. 📰 Summarizing a noteworthy piece of news (and why it’s relevant to you). 

3. 🎉 Updating you on several events this month that could bring value to you and your business.

P.S. Have you heard? We’re making legal support accessible, easy and affordable (we’re talking free 360 legal health checks, clear legal documents, a legal roadmap for your business and on-demand lawyers – all for up to 90% less expensive than a traditional law firm). Get yourself on the waitlist for first access with exclusive pricing.

1. Our most asked question of the month:
My employee/supplier/business partner/investor breached our contract. What do I do now? 😰

Believe it or not, we’ve had several companies breach their contracts with us in the last few months (you read that right; they’ve breached the legally binding contracts they made with a legal business full of lawyers. 👀).

So if it’s happened to us, don’t feel bad if it’s also happened to you.

Many of these companies had suffered some kind of loss or reputational damage and so weren’t able to fulfill their end of the bargain. This is always a tough blow; it affects business operations, company growth and even team morale.

No matter how you look at it, a breach in contract always puts you in a tricky spot. So to make your situation just a little bit easier, we’re giving you the roadmap of what to do now.

If you think (or know!) your contract has been breached, these are the five questions you need to answer:

1. How do I know if a breach of contract has occurred? 🤔

   A breach of contract has occurred when a party fails to fulfill contractual obligations, including failing to deliver goods or services, failure to make payments or failure to meet agreed-upon quality standards for goods/services. Courts may imply terms in certain situations.

2. What evidence do I need? 📃
   To make a claim, you must prove a legally binding contract, the other party's failure, and your resulting loss. Evidence includes photographs, delivery notes, and correspondence.

3. Is there a time limit? ⏳

   There's a 6-year time limit for filing a claim, which can be extended to 12 years for contracts executed as deeds.

4. What steps should I take? 📝

   If you suspect a breach, gather evidence, reserve your rights, and seek legal advice to avoid jeopardising your claim.

   Note: As you look to seek legal advice, consider: Is it cost-effective for you to get a lawyer involved for this claim? Or is it possible for you to handle the claim yourself? (if you’re unsure, you can always book a 15-minute consultation with one of our lawyers and ask for their advice).

5. What is the claims process? 💼

   The claims process typically involves sending a pre-action letter, considering alternative dispute resolution, and potentially going to court. If successful, you can obtain a judgement and enforce it to collect the debt owed to you.

2. Noteworthy News:
The OpenAI Restructure 👀

As you probably remember, Sam Altman was fired from OpenAI – and then very quickly re-hired. 😅

After his reinstatement, Altman was given the position of director on the nonprofit board of OpenAI. This meant he now had direct influence over the very board that originally ousted him.

Now let’s fast forward to today… Recent reports suggest that OpenAI is in talks to raise $6.5 billion at a $150 billion pre-money valuation. 📈

The deal reportedly hinges on OpenAI's ability to restructure and remove the profit cap for investors. The new approach will likely involve integrating the oversight of OpenAI LP (the for-profit arm of OpenAI) more closely under Altman’s direct influence, potentially merging decision-making bodies or shifting more power to a unified board where Altman has direct input.

This could swing OpenAI toward being a classic for-profit business, instead of the nonprofit it was originally structured to be (aka, Elon Musk’s worst fears – and the reason he brought a lawsuit against OpenAI earlier this year). 🙅‍♂️

Under the current cap on OpenAI, investors could receive up to a 20x return—meaning an investment of $100 million could yield up to $2 billion. However, under the proposed new structure, investors could see returns of up to $15 billion.

3. Upcoming Entrepreneurial Events 🤓

October 14th-19th: UK Black Business Week – Events delivered by industry leaders designed to equip Black Professionals and Entrepreneurs with business insights, new skills and knowledge to navigate the world of work.

October 21st-25th: Birmingham Tech Week – The UK’s largest regional tech festival and conference with over 7,500 people attending, with experts from some of the best-known tech companies covering a variety of important and innovative topics.

November 5th: The Women and Diversity in Tech and Channel Festival – Expand your personal network, learn practical tips on how to advance your career, receive advice from industry leaders, and hear success stories of improving representation in this year’s festival.

That’s all folks, and don’t forget to hit reply with business and legal questions that you’d like us to go over next month.

– The SuLe Team