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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
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Experience:  Attorney
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Our small TV station signed a contract - a one paragraph

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Our small TV station signed a ''contract''' - a one paragraph agreement with an advertiser to air their infomercial. The terms were based on an industry standard for direct response in which the advertiser did not pay for the airtime but a commission on sales generated via the toll-free number seen on the commercial and assigned exclusively to our station. The advertiser paid a $1,000 advance against future sales (which should have totaled ten times that amount)
The commercial was broadcast a large number of times. The advertiser after the fact stated that no sales whatsoever were generated. We then expected from the advertiser a report from the telemarketing agency confirming this claim. None was received.
Our station has refused to refund the advance amount until such standard documentation is received. The advertiser contacted us through their lawyer that they do not intend to provide such documentation and will seek the court to enforce a refund stating that the one paragraph contract does not oblige them provide any other documentation.
Our position is that the contract/agreement/MOU equally does not oblige us to rely on good faith. In all probability, either willfully or due to error the advertiser is not giving us credit for thousands of dollars of sales generated. The advance is designed to protect the Network against failure to pay by clients. In a three sentence agreement provided by the advertiser it is impossible to simply state if it isn't spelled out in the ''contract'' it is of no effect. What is your opinion/advice granting that you are not providing ''legal advice''. THank you.

My name is XXXXX XXXXX I'd be happy to answer your questions today.

I know it's a short contract, but does it say anything about proving sales generated? Phone records, or anything like that?
Customer: replied 5 years ago.
HI Lucy,

In short, no.

I don't know if legally this document would be called a contract. It reads:

Tape Ordered: March 14, 2011 - Delivery Date
Terms: PI/Advance Payment $1,200 30 Days/Refund

Sales determined on a 2-1 ratio. $2400 in sales = $1,200 commision
Client will refund if sales ratio not met.
Tape has been sent..Betacam SP.



Then it has a line where it is signed by us -- they prepared it but did not have a signature line for thesemves on a document.

If we said ''if it isn't in the contract, it isn't required'' then it would follow that since it doesn't say when a refund is due, we intend to make payment in 2050.

It seems to me the reasonable practice would be relevant bothto providing sales generated as well as timeline in which a refund was made if that was proven -- also according to industry standards -- 30 days not 40 years.

If we generated $2,000 ins ales, we would expect a $1,000 commission and refund $200 -- common sense. The ''contract'' however is extremely vague.

That is enough to be binding, because a contract is valid if it lays out all the essential terms. Where certain terms are missing, the law fills them in. So, if there's no term stated for payment, payment must be made "within a reasonable time". A vague contract will be interpreted against the person who drafted it - in this case you.

However, the botXXXXX XXXXXne is, if they sue you for a refund, they'll have the burden of proof. They'll have to give you something to show that they didn't make any commissions. If they can't do that, the judge will rule against them. So, it's perfectly reasonable for you to ask for proof, even if the contract doesn't state that it's required. Even though there's nothing in the contract to state how sales are established, a judge wouldn't just take their word for it, and you don't have to either.

With that said, in the future, you may want to think about clarifying it a little, even if just to state that you reserve the right to request proof.
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Customer: replied 5 years ago.
thank very much for that.
to clariy one point, we didn't draft the contract. the other party did.
does that mean by conclusion the contract would be determined against them not us? is that a ''major'' factor? thanks again
Customer: replied 5 years ago.
and would the fact that they refused to provide any proof in a timely fashion, dragged us to court, etc. likely lead to penalties against them short of just an order to produce evidence?
It would be construed against them, if they drafted it. It doesn't come up often - it's mostly used when the contract is ambiguous, but it's at least something to be aware of. The law doesn't allow for penalties just for suing someone, unless you can show that they knew it was a frivolous lawsuit. You can ask, but that's not easy to show.
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