Kovacik v. Reed
Facts
Plaintiff, a licensed building contractor, proposed a remodeling venture in which he would invest about $10,000 and defendant would act as job superintendent and estimator. The parties agreed to share profits 50-50, but they never discussed losses, and defendant never agreed to bear any losses. Defendant's only contribution was his labor, while plaintiff provided all financing through his business credit, except that defendant was sometimes reimbursed for materials he purchased. After the venture proved unprofitable, plaintiff demanded that defendant pay half the losses, and defendant consistently refused.
Issue
When joint venturers agree to share profits equally, but one contributes only money and the other contributes only labor, and there is no agreement about losses, is the labor-contributing venturer liable to reimburse the money-contributing venturer for one half of the monetary losses?
Rule
Although the general rule is that, absent agreement to the contrary, partners and joint adventurers share losses in the same proportion as profits, that rule does not apply where one party contributes money capital and the other contributes only skill and labor. In that situation, unless the parties agree otherwise, neither party is liable to the other for contribution for losses sustained, because each loses his own contribution: one loses money and the other loses labor.
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If Nora sues Devin for half of the venture's monetary losses, who is likely to prevail?