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Legal Eagle Esq.
Legal Eagle Esq., Attorney
Category: Business Law
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Experience:  Business / Corporate / Real Estate
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Contract Break

Resolved Question:

I am a business owner, running a restaurant, my manager forced me to signed a contract with a hood cleaning company. ( I was pregnant at that time, and he was fired after this), six times hood clean, based on $900/service,first time $2500.00. I paid $2500, they did the service, and hood is still nasty, greasy, leaking, landlord complain, very bad service. After that, I never called them to come back to do the clean. They send me to the court, and ask for $2800.00. hearing once, but the judge is a discriminator, never allowed me to explain, and his point is I signed the contract, i must pay. Reopen the case, my question is:
1. Is there a possibility I could win?
2. If the result is I must pay, if I sold the business, close the business, will this pull me out of the debt with no legal isssues.

Submitted: 9 years ago.
Category: Business Law
Expert:  Legal Eagle Esq. replied 9 years ago.

1) Were you sued for the entire remaining sum due on the contract?
2) Are you functioning as a sole proprietor, a corporation, partnership, or an LLC?
Customer: replied 9 years ago.
DATE: 6/12/06                                        &nb sp;                             Fax # (NNN) NNN-NNNNnbsp;                                      &nb sp;                                         & nbsp;                     
TO: Anise
        1 Kendall SQ Building 300
        Cambridge, MA 02139

ATTN: Cedric Adams
Phone:(NNN) NNN-NNNNnbsp;  DESCRIPTION Email:[email protected]          PRICE

1) Clean and Degrease hood, horizontal and vertical duct, fan, and all accessible backsplash. (4 workers, $240 per/hr, a minimum of 8 hours)

2) Material

3) 6-8 Access Panels ($100 per panel)

Note: Your exhaust system will be cleaned in accordance with code 96 of the NFPA. Your duct work is currently unaccessible and has never been cleaned. The access panels are a one time fee. They will allow us full access to the duct work so it can be cleaned. We currently are offering a 10% discount for customers who would like to sign a 2 year agreement. Ongoing the price to clean your exhaust system will be $900 with a 2 year agreement, without a 2 year agreement the price is $1000. Please sign and fax this proposal back to me to authorize the initial and ongoing cleanings. Please let me know if you have any questions. Thank You!!      



TERMS/CONDITIONS      Price based on agreed upon package deal     
** 24 hr. notice must be provided for any cancellation or a $125 fee will be charged.
** Initial cleanings are C.O.D
** No Show fee is $175
** Late fees and interest will be charged to all unpaid bills.

WORK AUTHORIZED BY:     SIGNATURE:_________________________________

NAME:_________________________________          DATE:______________

I attached the contract, now they request $2800.00 to pay.
this is corporation, 2 shareholder. thanks
Expert:  Legal Eagle Esq. replied 9 years ago.
Who is Anise? The court ordered you to pay the $2,800 dollars correct? What about the on-going agreement- did you execute one of those too?
Customer: replied 9 years ago.
Anise is the name of the restaurant, the agreement only served once, no second time.
Court ask me to pay before 7/17/08, I said I can't afford to pay, they ask to bring back all the expense on that day, and I file the appeal after the court, don't know if they will agree or not to reopen the case.
Expert:  Legal Eagle Esq. replied 9 years ago.
If the work was done then you owe it. If you sell the business by sale of the corporation stock then the purchaser will inherit the debt. If you close the business, the corporation will still be responsible for the debt and it shouldn't be a debt for you to pay since you didn't take it on personally.

When you signed the above contract did you do so in your own name or did you execute as an officer of the corporation (i.e. john does as vice president of xyz corporation).

If you have not co-mingled your personal assets and have otherwise maintained your own finances separate from that of the corporation AND followed all the corporate formalities then you should be personally responsible for the debts of the corporation.
Legal Eagle Esq. and other Business Law Specialists are ready to help you
Customer: replied 9 years ago.
the work was done only for the first time, I paid $2500, after that no clean job had ever been done and they ask me to pay $2800.

I sign the paper using my regular signature. (chinese), no initial , no english letter.
no title signed.

i don't understand the third part, from my understand, corporation's debt only exist when the corporation is still running, no personal property should connected with the corporation, it should be a seperated part. I understand the debt belongs to the corporation, but since it is closed, then personally I don't have the relationship with the debt. the court do not have the right to take my house , is this right? or not.
Customer: replied 9 years ago.
and the first question is
if there is a possibility to waive the payment , $2800. thanks
Expert:  Legal Eagle Esq. replied 9 years ago.
Just to be clear- did the court order you personally to pay the debt or did it order the corporation? Who was sued- the corporation or you personally?

If the court has ordered you to make the $2,800 payment then you have to abide by the order. Unfortunately the only way to get that "waived" is if the creditor agreed to waiving the amount (doubtful since they went to court to collect).

There are a multiplicity of concerns-

1) Even though you have closed the corporation, was it dissolved. If it was dissolved then you arguably have inherited the debt of the corporation. Alternatively if you have not dissolved the corporation then you may nonetheless may be personally liable since you didn't sign on behalf of the corporation but rather with your own name.

2) the court could potentially pierce the corporate veil (i.e. disregard the corporation) and make you personally liable for the debts of the corporation if you: 1) didn't follow corporate formalities (i.e. didn't sign in the capacity of a director or corporate office; and/or co-mingled personal funds, debts and assets with those of the corporation (i.e. you paid your car bill, house mortgage payment or otherwise purchased personal items with corporate debt or cash, didn't keep appropriate records of corporate meetings, etc.).

In the event that the court pierces the corporate veil then they could seek recovery of a court judgement by attaching liens against your personal assets and ultimately selling your assets to satisfy your creditors and/or any court judgments.

if retiring the corporate debt is your ultimate goal - and have no interest in continuing the corporate business then you should consider whether the corporation should file corporate bankruptcy.
Customer: replied 9 years ago.
1.they sued Anise Restaurant,
2. the agreement should based on mutual satisfaction. if i am not satisfied with their service, i still have to pay all the 5 services, is it the US business law?
3. I roughly scaned the contract law and business law, I found there still have some argument between both side.
4. I thought I only need to pay the break contract fee like $500. ( this number is XXXXX to me, but not $2800.)
5. If I file the corpration backrupt, will this influence my personal credit?