Breach of Contract

[mjveinbergs]

I entered into a contract on 3/28/96, investing $5000.00 into a small company. The owner was supposed to pay me $7500.00 by 3/28/97 & pay me 1% of gross sales for 3 years from the first sale of this product. Deals fell through and I have still received no payment. I have the name and number of his patent attorney, his last address in Nevada (he no longer resides there), his parents address in Los Angeles, the name and number of his last empoyer (a cruise line, that he will probably return to work for again), and no current contact information. I am interested in getting the $7500 even if I need to write off the 1% as I no longer think that the company will ever get off the ground. What is my best course of action? File in small claims for $5000, goto Superior & retain an attorney/legal professional, or goto Superior court and represent myself? I have a very simple contract, as well as supporting documentation that he sent me during the next 2 years. Also, during 1997 he sent me $600 in cashiers checks. I know that he earns a good salary with the cruise line, but don't know if he currently has the money to pay, nor have information as to when he will return to work.

Thank you very much for your advice!!!

 

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by mjveinbergs:
I entered into a contract on 3/28/96, investing $5000.00 into a small company. The owner was supposed to pay me $7500.00 by 3/28/97 & pay me 1% of gross sales for 3 years from the first sale of this product. Deals fell through and I have still received no payment. I have the name and number of his patent attorney, his last address in Nevada (he no longer resides there), his parents address in Los Angeles, the name and number of his last empoyer (a cruise line, that he will probably return to work for again), and no current contact information. I am interested in getting the $7500 even if I need to write off the 1% as I no longer think that the company will ever get off the ground. What is my best course of action? File in small claims for $5000, goto Superior & retain an attorney/legal professional, or goto Superior court and represent myself? I have a very simple contract, as well as supporting documentation that he sent me during the next 2 years. Also, during 1997 he sent me $600 in cashiers checks. I know that he earns a good salary with the cruise line, but don't know if he currently has the money to pay, nor have information as to when he will return to work.

Thank you very much for your advice!!!<HR></BLOCKQUOTE>

My response:

The answer to your problem lies in your very first sentence. Do you know what the key word is, that jumps out right from the page?
Scroll down . . . . .

The word is "invest." You didn't make a loan to this person, you made an "investment," taking a chance with him that things would work out. Like "investing" in the stock market, we all cheer when a stock goes through the roof . . . and when the company goes out of business, our stock is worthless.

You have no claim for reimbursement, unless there is fraud involved - - e.g., if he took your money under false pretence to get gambling money. But, if he used the money for the invention and his business, and it failed, you lose right along with him.

IAAL


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By reading the “Response” to your question or comment, you agree that: The opinions expressed herein by "I AM ALWAYS LIABLE" are designed to provide educational information only and are not intended to, nor do they, offer legal advice. Opinions expressed to you in this site are not intended to, nor does it, create an attorney-client relationship, nor does it constitute legal advice to any person reviewing such information. No electronic communication with "I AM ALWAYS LIABLE," on its own, will generate an attorney-client relationship, nor will it be considered an attorney-client privileged communication. You further agree that you will obtain your own attorney's advice and counsel for your questions responded to herein by "I AM ALWAYS LIABLE."

 

[mjveinbergs]

Just for completion's sake I have typed in the simple contract and some other documentation that I have regarding this matter. Given this documentation, does your advice remain the same? Thank you very much for your help!


Sincerely,
Michael
---------

Date: Mach 28, 1996

I, Phil XXXXX, sole proprietor of an inventor of the Xxxxxxxx putter, do hereby offer the following to Michael Yyyyyyy.

In return for an investment of $5000.00:

$2500.00 paid on 2/28/96
$2500.00 paid on 4/96

a) A 50% interest and principal returned within 1 year ($7500 total)\
b) 1% of total Gross Sales of the Xxxxx Putter for a period of 3 years from the date of the 1st sale of the 1st Xxxxx Putter (Approximately 4/28/96)

Signed By XXXXXXXXXXX
Signed By YYYYYYYYYYY

-------

Cashier's checks sent $100.00 on 5/30/97
$500.00 on 2/13/98

--------
Letter posted 5/4/97

"...As of January 7th, I had nearly $6,000 saved to repay your loan. I was involved in an accident that injured my back...and the money was spent on medical bill...But I am doing my best to get this money to you. As well as your promised 1% of sales..."

--------
In another document dated 8/9/97

He lists "Up front costs and Investor Return"

on a package sent out to everyone involved in the company. Therin he has written "Michael Yyyyy (my last name he had misspelled).............$8,000. + 1% gross sales /3 years"

 

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by mjveinbergs:
Just for completion's sake I have typed in the simple contract and some other documentation that I have regarding this matter. Given this documentation, does your advice remain the same? Thank you very much for your help!


Sincerely,
Michael
---------

Date: Mach 28, 1996

I, Phil XXXXX, sole proprietor of an inventor of the Xxxxxxxx putter, do hereby offer the following to Michael Yyyyyyy.

In return for an investment of $5000.00:

$2500.00 paid on 2/28/96
$2500.00 paid on 4/96

a) A 50% interest and principal returned within 1 year ($7500 total)\
b) 1% of total Gross Sales of the Xxxxx Putter for a period of 3 years from the date of the 1st sale of the 1st Xxxxx Putter (Approximately 4/28/96)

Signed By XXXXXXXXXXX
Signed By YYYYYYYYYYY

-------

Cashier's checks sent $100.00 on 5/30/97
$500.00 on 2/13/98

--------
Letter posted 5/4/97

"...As of January 7th, I had nearly $6,000 saved to repay your loan. I was involved in an accident that injured my back...and the money was spent on medical bill...But I am doing my best to get this money to you. As well as your promised 1% of sales..."

--------
In another document dated 8/9/97

He lists "Up front costs and Investor Return"

on a package sent out to everyone involved in the company. Therin he has written "Michael Yyyyy (my last name he had misspelled).............$8,000. + 1% gross sales /3 years"<HR></BLOCKQUOTE>


My response:

The contract clearly regards your money as an "investment" in the business. However, and for some unknown reason, the gentleman has gone "outside the four corners" of the contract by regarding your money as a "loan", and going so far as to make payments to you on that "investment." However, my thoughts do not change because of what is written in the contract. Although he has gone "outside" of the contract, I believe that is his "mistake" or misunderstanding of his obligations to you. And, for that, your should feel very lucky. My opinion is that, but for his failure to have an attorney advise him otherwise, he should not be making any payments to you. Perhaps, by now, he has realized his error, that it was just an error on his part, and does not change the terms or conditions of the written agreement. Sorry.

IAAL


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By reading the “Response” to your question or comment, you agree that: The opinions expressed herein by "I AM ALWAYS LIABLE" are designed to provide educational information only and are not intended to, nor do they, offer legal advice. Opinions expressed to you in this site are not intended to, nor does it, create an attorney-client relationship, nor does it constitute legal advice to any person reviewing such information. No electronic communication with "I AM ALWAYS LIABLE," on its own, will generate an attorney-client relationship, nor will it be considered an attorney-client privileged communication. You further agree that you will obtain your own attorney's advice and counsel for your questions responded to herein by "I AM ALWAYS LIABLE."



[This message has been edited by I AM ALWAYS LIABLE (edited April 10, 2000).]