Sinking ship - abbreviated....

[rmsbuffalo]

I have an agreement with a leasing company to lease $40,000 in restaurant equipment. The company issued purchase orders to my equipment suppliers and they have delivered the equipment. Now, the leasing company won't pay my suppliers and are trying to cancel the deal.

I signed the contract, but I only have the cancelled check for advance payments and purchase orders to suppliers as verification of their acceptance of the agreement. What recourse do I have and what is the timing of it?

The leasing comapny is in New Hampshire and we are in New York. For more details, read my other post.

Sincerely
-JM

 

[loku]

Leasing company breach

You have a valid oral contract with the leasing company, unless the agreement was contingent on having a written contract. If you do have a valid oral contract, the purchase orders, written contract that you signed, and the cancelled checks would probably be very strong evidence of the agreement.

If the oral contract is valid, they are in breach of it and you are entitled to damages for your losses caused by the breach.

Since you had no agreement with the suppliers, you have no rights against them.

Unless the contract specifies otherwise, since the service was to be performed in New York, and since you are in NY, the NY courts would probably have jurisdiction,

 

[rmsbuffalo]

loku-
Thanks for your reply. I also posted a lengthier version of this situation which referenced the severity of the problem. I am unable to obtain alternate financing because my financial resources (cash and credit) have been considerably depleted through investments in fixtures and leasehold improvements in preparation of the restaurant opening. I also signed a 10 year lease at aprox. $35,000/yr.

I relied on the approval and subsequent purchase orders from the leasing company for funding my equipment. This was key in making my decision to open the restaurant and paramount to the equipment selections that I made (New vs. used). To what extent can I hold them liable if their breach prevents me from opening? Would it be realistic to include projected profits for the term of the lease in a legal action?

- Jerry

[Edited by rmsbuffalo on 02-28-2001 at 11:26 PM]

 

[loku]

Supplier's breach

I relied on the approval and subsequent purchase orders from the leasing company for funding my equipment. This was key in making my decision to open the restaurant and paramount to the equipment selections that I made (New vs. used). To what extent can I hold them liable if their breach prevents me from opening? Would it be realistic to include projected profits for the term of the lease in a legal action?

They are liable to you for all your losses caused by their breach. Projected profits are part of that loss, although it is sometimes very difficult to prove what they would be. That is usually a matter of expert testimony (accountants, economists, experts in the restaurant business, etc), and somewhat a matter of your prior experience. However, note that you have a duty to mitigate the loss (do what it takes to minimize the loss).

Since this is a large loss to you, and there are a number of legal issues involved, you would be well advised to hire an attorney to represent you on this. There could be a vast difference in the amount you end up with if this is handled by an expert.