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    Contract question
    I'm brand new to this board, looked at it yesterday and signed up today. I own my own small business and have a question about a contract a customer signed on 9/30/2005. My company is an online coupon company. I sell to local businesses and put offers on my website. There is a cost associated with every ad I put on my site. Now, this gentleman signed the agreement and I produced his artwork(ad - this is my cost - I have a graphic artist design all my ads). I stopped in yesterday October 18, 2005 and he informed me that his partner didn't want to advertise on my website and they wouldn't pay. The whole contract was on $400 for half a year. How can I go about collecting my $100 set up fee, which is printed clearly on the contract. That is all I really want, to cover my costs. I have an lawyer who has handled a few issues for me already but I was hoping to not involve him in every little contract dispute I have.

    Thanks,
    Larry


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    All I can think of, short of lawyer involvement, is to write a very formal and legalistic type letter yourself. Couch it in careful measured terms, with hints/etc of legal and further action (although I would refrain from direct threats), and perhaps copy it to an imaginary legal bod within you company, etc.

    You could check out the Better Business Bureau if they are members (or maybe quote sources like this in your letter, with respect to reference to good practice... but really as another veiled ref to your potential future actions).

    If they simply won't budge though, and don't seem to care about legal action or loss of reputation, I don't see any other alternative to legal action.


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    #3
    Join Date
    Feb 2006
    Location
    Las Vegas, NV - Nashville, TN
    Posts
    16
    What leverage do you have in this situation other than your contract? If nothing, then your options are pretty predictable.

    This is an age old problem and will continue to happen. Suggest your client pays the $100 out of pocket expenses and you will cancel the balance of the contract. If he is honorable, he'll pay. If not your dealing with someone that will continue to get the best of you if he can.

    I think BusinesssMans idea is worth a try. You never know how your opponent will respond. It's wise to try and not second guess him. If the letter doesn't work, then small claims court would likely be in order. I would make the client aware of your intention to file for the full contract amount, and he has one last chance to pay only the $100. Then it will be too late.

    Always maintain professionalism with showing any emotion. Be the mature business person, firm, but reasonable. This tends to frighten the opponent when he see your confidence and that you're in control.

    Chances are, he and his partner already know everything I'm outlining here and figure you will have to go through a lot for your $400. Then, once you win your judgment, you still have to collect it which may or may not be possible. That's another issue at this time.

    Does your contract have a "Loser pays court cost" clause? If yes, then civil court may be the way to go if an attorney feels your contract is strong enough to win. Then, your using an attorney raises the ante to your opponent, because now he may have to pay your $400 and court costs. This threat may be enough to scare him into settling.

    If you don't have a loser pays court cost clause, then do you have an "arbitration clause?" If so use it.

    The bottom line

    If they are just refusing to pay you they likely know it will be difficult for you to win, especially if your contract is weak and they KNOW IT. Do you belong to prepaid legal services? If yes, use it to get an attorneys opinion of your contract. Contracts MUST state your rights or, in most states, you don't have them. They're NOT implied but most are required to be specific.

    I once found a weak clause for one of my clients (years ago) in a century 21 real estate contract. My client backed out of an escrow and agreed to let the seller keep $500 of the $1000 deposit. The seller refused and went to court. I discovered the clause my client signed stating he would have to forfeit his TOTAL $1000 deposit was worded CORRECTLY but C-21 LOST the case.

    Why? Because the LAW stated that SPECIFIC clause MUST be in 14 pt type or bigger and it WASN'T. My client got the full $1000 back out of escrow. And the seller was in fact a highly EXPERIENCED real estate broker. Remember the old proverb, "Let him that thinks he is standing, beware he does not fall. This broker fell hard and lost everything when he originally had a bird in the hand.

    Let us know what happens and how we may continue to help you in this matter. Getting back to us with the outcome equips us with ongoing information to better serve the next forum participant.

    Regards,
    Maverick


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    Depending on the law on your country, you should write a demand letter or a letter specifying the contract that you entered with the person who agreed to enter into a contract. The demand letter should state all the specifics in the contract and should demand payment from the person who will not pay. The next is to sue the person if he still fails to comply with the demand letter.


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    This is pretty tricky, it depends on what your contract states exactly. If the owner didn't have permission to actually make the decision in the first place, then his signature on the contract would be invalid because he didn't have the rights to use the company's name.


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    You should have your attorney draft a letter requesting payment for the set up fee. As far as Nick's comment about someone not being authorized to enter into contracts on the company's behalf, he is wrong. It doesn't matter if someone is authorized or not, if they sign the contract it is legally binding. So, have your lawyer draft the letter and send it to them. Let them know the terms of the agreement but that you are willing to settle for the set up fee in order to cover the costs that have already been incurred on their behalf. Then see what happens.


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    Your contract depends on the law of the country. Every country has different rules and conditions.


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