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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 37702
Experience:  Retired (mostly)
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i need a specialist in Californian law regarding IT develo

Resolved Question:

i need a specialist in Californian law regarding IT development
Submitted: 5 years ago.
Category: Business Law
Expert:  socrateaser replied 5 years ago.
I worked for the world's largest semiconductor corporation for 10 years. Will that do?

Customer: replied 5 years ago.
Dear Sir, thank you for replying to my question.

I contracted a web development company based in SF in March last year. The delays were not respected due to a poor quotation and research on their end (due to my request of design and programing changes if you ask them!) Penalties were to start past delivery date (15th Oct 2010) which I never claimed. I ended up accepting paying more, yet they still did not deliver the website for Christmas resulting in an important loss of not only Marketing and advertising money but also a very large amount of sales expected thanks to interviews booked with Major National TV Shows in the USA (Today Show being one of them) such interviews never took place since the site was not ready!

Some of their staff insulted me; and last but not least, they threatened of stopping the site based only on some assumption that we would not continue paying for the remaining pending payments...

What are my rights?

We signed an agreement which I can easily send you (2 pages only!) + an Addendum (1 page.)

Our company is registered in the Delaware and it is an LLC, but the contract stipulates that only the state of CA is competent.

Looking forward to hearing from you soon.

Expert:  socrateaser replied 5 years ago.

Cal. Civil Code 3300 provides, "For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom."

Typically, in order to hold a developer to compensate for damages caused by the developer's delay, the contract must provide notice of the likely damages caused by that delay.

You state that there were delay penalties. Penalties are generally not recoverable on a contract, because they are considered punitive, and punitive damages require proof of fraud (intent to injure through deceiption) before they can be awarded.

However, if the substance of what are called penalties on the contract is to recover for an ascertainable loss of revenue, then that could be deemed compensation for the lost revenue.

The main issue for you is proving your loss in some ascertainable way. You can't just claim that you would have made $X, if the website were running sooner -- you have to prove it with credible evidence, such as through actual orders from a test website, etc. Otherwise, the court will deny your damage request.

Believe me, I am sympathetic to your situation, considering the sort of marketing opportunities that you appear to have garnered in advance. But, that will not move the court to award you damages, unless you can prove your reasonably foreseeable losses.

Should you choose to go forward, then in my view, you cannot sue in small claims, because small claims judges are not disposed to award damages which are not clearly stated in a contract or result from actual out-of-pocket expenditures.

You will need a lawyer and you will have to pay a fair amount to sue (or, to arbitrate your claim, if the contract provides for arbitration).

For a contract litigation attorney referral, see this link.

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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 37702
Experience: Retired (mostly)
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