Contract Advice Needed

[hainnadav]

I live in MA. I am starting a business manufacturing and selling a product. The product involves many different parts that work together. Last year I mistakenly signed an agreement with a vendor to pay them back upon the commencement of unit sales (we agreed to 50% down, then payments). At the time everything looked like I would be selling units with 3 months. I have had manufacturing issues with other parts that work with their parts so no units have manufactured and sold. Part of our agreement reads:

PAYABLE ON the first of each month the amount of $30.00 for each unit sold in the previous month. In the event no units are sold, no payment is due. If in 6 months from the start of Sales, and no later than Feb 1, 2004 the amount paid is less than $2700.00 (15 units/month X $30.00 X 6 months) the monthly payment will no longer be based on sales but on a minimum payment of $450.00 per month.

When do the minimum payments of $450.00 per month start?

It seems that this can be read 2 ways:
a. On Feb 1, 2004 if no units are sold $2700 is due immediately. Then $450 a month until it is paid off
b. If no units are sold by Feb 1, 2004 the monthly payment becomes $450 a month until it is paid off.

Your thoughts are appreciated,

Thanks

 

[krispenstpeter]

although I do have an opinion based on a simple interpetation of what you quoted from the contract, to put it mildly, you need an attorney to review the entire contract before any opinion can be valid.

However, if this is all that the contract states as to payment and sales, then you simply owe a minimum payment of $450 for each month prior that no units were sold from Feb. 1, 2004.

Hlowever, since you say you paid 50% down and you quote a figure of $2,700, I strongly suspect that there is other language in the contract that needs to be reviewed. And THAT is why a local attorney should review the ENTIRE contract.