Contract null and void?

[dablch1031]

What is the name of your state (only U.S. law)? North Dakota

I borrowed $1500 from a former employer. We wrote up and agreed on a contract that stated he would cash one $250 check per month for the length of 6 months. During that 6 months I would also owe $50 per month in interest to total $300. In the end I would pay him back a total of $1800. He cashed one $250 check each month for the first 3 months, however this month, the fourth month, he cashed two $250 checks within a week of each other. Since I was not expecting the second $250 check to be cashed this month, I had written checks to various places to pay for bills and groceries, but now that he cashed that check I am now going to bounce those checks. This means, not only will I have to pay $20 per NSF check to my bank, I will also have to pay a $30 returned check fee to each of these places. Since he cashed the second check during this month, even though our contract clearly states $250 per month, does that mean he breaches the contract and the contract is now null and void?

 

[justalayman]

how could he cash a check you have not given him??



or had you given him a serious of checks with the agreement he cash them as you outlined?


to the last question:

no

 

[dablch1031]

I had left all six checks with him with the agreement that he would cash only one check per month.

 

[justalayman]

depending on the specific terms of your agreement, what he did could result in him owing you your damages. It would not invalidate the remainder of the contract though.




can you list the dates he deposited the checks (all of them, not just the two close together)


did you have any agreement more specific than 1 check each month?

 

[dablch1031]

Yes. The dates he cashed the checks are as follows:

10/19/2015
11/23/2015
12/21/2015
1/19/2016
1/27/2016

The contract states:

I, (his name), agree to lend (my name) $1500. (my name) agrees to make monthly installments in the amount of $250 each month for 6 months. (my name) also agrees to pay $50 in interest for each month that it takes to pay the loan ($50X6 months=$300).

Then we both signed and dated and I also had a witness sign and date as well. There were no specifics in the contract on how the interest would be paid but we did have a verbal agreement that I would pay the interest after the last check was cashed. My witness was there when we verbally agreed on this.

 

[justalayman]

well gosh darn, you even have it in writing. Great. Everything should always be in writing.


anyway, the reason I asked for this:


10/19/2015
11/23/2015
12/21/2015
1/19/2016
1/27/2016


If it was as simple as something like he cashed a check the last week of one month and the first week the following month you would likely be screwed. That would have met the definition of once per month.


it is obvious not only did that not happen but he actually took two payments in one month.


So no, it is not going to invalidate the contract but he owes you for the expenses incurred due to cashing two checks.




what there is a problem with is the amount of interest charged. the law allows for 6% per annum (yearly). Charging excessive interest is called usury.

47-14-10. Civil liability for usury - Forfeiture of interest.
The taking, receiving, reserving, or charging of a rate of interest greater than is allowed by
the laws of this state relative to usury shall be deemed a forfeiture of the entire interest which
the note, bill, or other evidence of debt carries with it or which has been agreed to be paid
thereon, and in addition thereto, a forfeiture of twenty-five percent of the principal thereof. In
case the greater rate of interest has been paid, the person by whom it has been paid, or that
person's legal representative may:
1. Recover back twice the amount of interest thus paid, together with twenty-five percent
of the principal from the person taking or receiving the same, but an action must be
commenced for such purpose within four years after the time when the usurious
transaction occurred; or
2. Offset twice the amount of such interest against any indebtedness which the person
who paid the same owes to the party or parties receiving such usurious interest.

(it can also be criminal)

the only argument I can see against usury is if the " interest" is not actually interest but a fee. I don't know if that is a possibility or not but it is how some businesses avoid claims of usury. It would need to be researched to give anything close to a dependable answer.

 

[dablch1031]

So if I am reading that correctly, I can forfeit all interest? This was a personal loan and had nothing to do with his business and it clearly states that the $50 per month was in fact interest.

My next question is this: if the contract is not invalidated, do I have the right to stop payment on the last check that he has and send him payment in March since he already cashed the February check? I forgot to add our contract stated the payments would be made on the first of the month, however my sister (my witness that signed the contract) also texted him a week after signing the contract asking him if he could cash the checks on the 15th of the month instead of the first and he agreed. I'm scared he's going to cash the next one on Monday and then I'm really going to be in some trouble.

 

[justalayman]

You can attempt to refuse paying the interest. Only a court or agreement can actuslly alter a contract. If you make the claim he forgive the interest he can either agree or make a demmand you pay it. If you refuse he gets to sue you and the court decides.


from what you posted I see nothing that would prevent you from stopping payment on the check. If you do make sure you give him written notice and your intention of paying him cash when the payment is due.

The cost to stop payment on the check is yours though

 

[dablch1031]

I will gladly pay the stop payment fee. Covering a $15 stop payment fee is way better then trying to figure out how to cover a $250 payment especially since he's already screwed me and I have to figure out how to cover the checks I wrote that won't clear the bank now.

Thanks for your help! It is much appreciated!