Breach of contract lawsuit threat years later

[draco]

What is the name of your state? Minnesota

Several years ago we took orders and prepayment for some merchandise. Due to unforeseen circumstances, we were unable to deliver the merchandise. We promptly issued a full refund to the customer. Now, several years later they're threatening to sue us for breach of contract. We had no contract for damages for non delivery, and they never said anything at the time. Do they actually have a case?

Thank you in advance.

 

[doucar]

How long ago did you enter into the agreement with them and was it oral or written?

 

[draco]

There was a written order, but no additional contract or terms. It was almost 5 years ago. Minnesota 336.2-725 seems to indicate four years, but I've seen other references on the web to six years. If it is six years, can they come back almost 5 years after they accepted the refund and have a case for damages?

 

[adjusterjack]

Minnesota 336.2-725 seems to indicate four years,

Section 336 of the Minnesota statutes is the Uniform Commercial Code which applies to the sale of goods.

336.2-725 STATUTE OF LIMITATIONS IN CONTRACTS FOR SALE.
(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.

Sec. 336.2-725 MN Statutes

I'm pretty sure that one applies.

There was a written order, but no additional contract or terms.

A written order is a contract. The SOL only specifies contract and does not differentiate between written and oral.

If it is six years, can they come back almost 5 years after they accepted the refund

Can they? Obviously they can do it because they are doing it, or attempting to.

and have a case for damages?

Unlikely. You do have records of the invoice and the refund, right?

What damages are they claiming?

We had no contract for damages for non delivery,

Didn't need one. You might have been liable for consequential damages under common law.

I suggest that a few hundred dollars to have a lawyer write a "shut up and go away" letter might be in order.

 

[LdiJ]

Section 336 of the Minnesota statutes is the Uniform Commercial Code which applies to the sale of goods.

336.2-725 STATUTE OF LIMITATIONS IN CONTRACTS FOR SALE.
(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.

Sec. 336.2-725 MN Statutes

I'm pretty sure that one applies.



A written order is a contract. The SOL only specifies contract and does not differentiate between written and oral.



Can they? Obviously they can do it because they are doing it, or attempting to.



Unlikely. You do have records of the invoice and the refund, right?

What damages are they claiming?



Didn't need one. You might have been liable for consequential damages under common law.

I suggest that a few hundred dollars to have a lawyer write a "shut up and go away" letter might be in order.

It could be, if the amount of money involved is worth paying a lawyer a few hundred dollars to write that "shut up and go away" letter.

 

[LdiJ]

What is the name of your state? Minnesota

Several years ago we took orders and prepayment for some merchandise. Due to unforeseen circumstances, we were unable to deliver the merchandise. We promptly issued a full refund to the customer. Now, several years later they're threatening to sue us for breach of contract. We had no contract for damages for non delivery, and they never said anything at the time. Do they actually have a case?

Thank you in advance.

How much money are we talking about? What sparked the threat to sue? Did it come out of the blue or was it a result of something?

 

[zddoodah]

we took orders and prepayment for some merchandise. Due to unforeseen circumstances, we were unable to deliver the merchandise. We promptly issued a full refund to the customer. Now, several years later they're threatening to sue us for breach of contract.

If a seller breaches a contract for the sale of goods by failing to deliver the goods, the buyer (EDIT: thanks to "adjusterjack" for pointing out my typo) is typically entitled to "the difference between the market price [of the goods] at the time when the buyer learned of the breach and the contract price[,] together with any incidental and consequential damages . . ., but less expenses saved in consequence of the seller's breach." Minnesota Statutes, section 336.2-713. Alternatively, the buyer may "cover" by procuring substitute goods, in which case the buyer is entitled to "the difference between the cost of cover and the contract price[,] together with any incidental or consequential damages . . ., but less expenses saved in consequence of the seller's breach." Section 336.2-712.

In what manner did your buyer make this threat? If it was in writing, did the buyer state what sort of damages it is seeking?

We had no contract for damages for non delivery

So?

they never said anything at the time.

"They" don't have to.

Do they actually have a case?

Depends on the terms of your contract and the relevant facts that we don't know. However, as you noted, the statute of limitations applicable to contracts for the sale of goods is "four years after the cause of action has accrued." Section 336.2-725. In your follow up post #3 in the thread, you wrote that "It was almost 5 years ago," and it appears that "it" refers to the acceptance of the refund, which must have happened after the breach (which is when the cause of action would have accrued). That being the case, it does not appear that any lawsuit now would succeed, even if the lawsuit were otherwise meritorious.

A written order is a contract. The SOL only specifies contract and does not differentiate between written and oral.

A written order is an offer to contract (unless there's an already existing contract providing for occasional written orders). A written order could become a contract if it is accepted by the other party (which appears to be the case here), which brings us to a potentially relevant point: "[A] contract for the sale of goods for the price of $500 or more is [generally] not enforceable . . . unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party's authorized agent or broker." Section 336.2-201(1).

 

[draco]

Yes, we have records of the original invoice and the refund.

The order was for a couple thousand dollars. Market value is hard to determine, as it was a custom made product that we were planning to bring to market.

Nothing brought it on. It was just out of the blue. They didn't specify an amount, but are talking about damages for lack of use and resale. I'm guessing they're going to try to claim some exorbitant amount.

Thanks for all the answers.

 

[adjusterjack]

If a seller breaches a contract for the sale of goods by failing to deliver the goods, the seller is typically entitled to

I think you mean buyer.

 

[zddoodah]

I think you mean buyer.

Eek...you are correct, and I'm going to edit my prior post accordingly.

 

[zddoodah]

The order was for a couple thousand dollars.

So...small claims territory if anything.

Market value is hard to determine, as it was a custom made product that we were planning to bring to market.

Then the buyer would likely seek "cover" damages.

Hard to say much more without knowing more details, but it sounds like an iffy claim even without factoring in the statute of limitations.

This almost certainly something your business insurance won't cover, but you should put your carrier on notice anyway.

 

[LdiJ]

Yes, we have records of the original invoice and the refund.

The order was for a couple thousand dollars. Market value is hard to determine, as it was a custom made product that we were planning to bring to market.

Nothing brought it on. It was just out of the blue. They didn't specify an amount, but are talking about damages for lack of use and resale. I'm guessing they're going to try to claim some exorbitant amount.

Thanks for all the answers.

That whole "custom made product" thing could go a couple of different ways. Based on that I would suggest that IF you actually get sued, and the suit is for more than just a couple of thousand dollars, that you consult with an attorney with whom you can explain the down and dirty details of the "custom made product".