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Burned on commission sales contract

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What is the name of your state? California

At what point does a contract unreasonably favorable a stronger party? We signed a contract with an ad agency to provide four of their clients with subscribers through our business and accept a fixed commission per subscriber. The contract states what we will do, very specifically, and also states that if the agency is not paid by the client they will not pay us. This is a large, well known company with an excellent reputation, and we reasonably expected that non-payment by their client would not be an issue. After delivering a lot of subscribers and running up a bill in the thousands, the agency notified us that two of the clients had gone to collection and we would not be paid for their subscribers. We asked for help from them collecting directly from the clients, and they basically said, "Here is their phone number."

We spent the next six weeks pressuring for payment on the rest of the balance, then the agency informed us that their other two clients had also gone to collection, and we would not be paid for those, either. While this drama was unfolding we found out that the agency knew that these particular companies had a history of non-payment, so there was a good chance they knew we would not be paid. We do have proof they were notified of this prior to entering into the contract with us.

We feel that the agency entered into the contract in bad faith, knowing that there was a good chance we would not be paid. We feel that they did not make any effort to collect on our behalf, and are hiding behind the clause in the contract to absolve themselves of financial responsibility. In addition, when we were notified that the last company would not pay us, they were still accepting subscriptions on that clients behalf, (not from us) which to us shows bad faith beyond a doubt.

We feel that the origianl contract is null because they breached by not making an effort to help us collect, and acted in bad faith by continuing to accept subscriptions when they knew the parties would not be paying. Is this a good basis for a small claims suit, or are the odds that the judge will throw us out because of the clause in the contract? I'm ready to file a suit, but I haven't been able to find any specific laws that address these issues and would prefer to not look like an idiot in court :p) .

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