Zibplipperman
Junior Member
Implied Contract
Several years ago we partnered with company X to offer a credit card processing service that is integrated into our software and they would provide the software code that would handle the payment processing with their service. We entered into an agreement where they paid us 70% of the credit card processing commissions because our staff would do the majority of work to set up and manage the merchant accounts. This agreement has worked fine for many years and the monthly residuals have become a significant part of our income.
The original agreement was negotiated and signed by a former employee and the original copy is filed away somewhere. I found a file dated in 2007 which shows the 70% rate. In 2008 I was contacted by company X and told that they did not have a signed copy of the agreement on file, so they sent a copy which I signed and returned to them. There had been no mention beforehand that they wanted to changed the terms of our agreement, so I did a cursory review and signed it. In hindsight, I had missed a change that said we'd receive 50% instead of 70%. However, we continued to receive our 70%, so there was no reason for us to believe anything had changed.
We have received 70% residuals for the past eight years.
Our relationship abruptly changed in December of 2015. Our first indication that something was wrong was when our residuals had not been posted to our bank account. Normally this is done by the 20th of the month or the following business day. On December 22 I sent a message to our representative at company X to see what the delay was. Late that afternoon the representative from company X replied: “We just found out a massive billing mistake. We will get you more info tomorrow.”
The next day I called and our representative refused to explain what the billing mistake was and said she would send an e-mail in a few hours. Her reply: “We have just found out that our agreement with you (both the current one and the one prior that) is that we pay 50% of the residual to you. It seems we have been paying you 70% for a long time. We are working on getting you the accounting for the 2015 over payments as a first step. These over payments definitely exceed any amounts due this month, and we are therefore offsetting as per our current agreement with you.”
So, company X decided to withhold all of our residuals for December, which we estimate to be around $10,000, with the implication that they may withhold future residuals as well. It is our belief that since they failed to disclose the changes in our payment terms, and continued to pay us our 70% commission over the years, that the original negotiated agreement still stands and they owe us 70%. They have no legitimate reason to withhold our residuals.
What do you think our course of action should be? Would the original 70% hold up should this go to court/arbitration? Needless to say we’d like to resolve this as quickly as possible.
Several years ago we partnered with company X to offer a credit card processing service that is integrated into our software and they would provide the software code that would handle the payment processing with their service. We entered into an agreement where they paid us 70% of the credit card processing commissions because our staff would do the majority of work to set up and manage the merchant accounts. This agreement has worked fine for many years and the monthly residuals have become a significant part of our income.
The original agreement was negotiated and signed by a former employee and the original copy is filed away somewhere. I found a file dated in 2007 which shows the 70% rate. In 2008 I was contacted by company X and told that they did not have a signed copy of the agreement on file, so they sent a copy which I signed and returned to them. There had been no mention beforehand that they wanted to changed the terms of our agreement, so I did a cursory review and signed it. In hindsight, I had missed a change that said we'd receive 50% instead of 70%. However, we continued to receive our 70%, so there was no reason for us to believe anything had changed.
We have received 70% residuals for the past eight years.
Our relationship abruptly changed in December of 2015. Our first indication that something was wrong was when our residuals had not been posted to our bank account. Normally this is done by the 20th of the month or the following business day. On December 22 I sent a message to our representative at company X to see what the delay was. Late that afternoon the representative from company X replied: “We just found out a massive billing mistake. We will get you more info tomorrow.”
The next day I called and our representative refused to explain what the billing mistake was and said she would send an e-mail in a few hours. Her reply: “We have just found out that our agreement with you (both the current one and the one prior that) is that we pay 50% of the residual to you. It seems we have been paying you 70% for a long time. We are working on getting you the accounting for the 2015 over payments as a first step. These over payments definitely exceed any amounts due this month, and we are therefore offsetting as per our current agreement with you.”
So, company X decided to withhold all of our residuals for December, which we estimate to be around $10,000, with the implication that they may withhold future residuals as well. It is our belief that since they failed to disclose the changes in our payment terms, and continued to pay us our 70% commission over the years, that the original negotiated agreement still stands and they owe us 70%. They have no legitimate reason to withhold our residuals.
What do you think our course of action should be? Would the original 70% hold up should this go to court/arbitration? Needless to say we’d like to resolve this as quickly as possible.
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