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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
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Experience:  30 years of corporate, litigation and international law
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We entered into a contract to have a food product co-packaged

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We entered into a contract to have a food product co-packaged for our company. The co-packing company is in Utah. We put an initial deposit down of $16k.

Short story: They kept telling us we were in line to be produced. Then when the time came, they would bump us back. In the end, we were told we would be produced on Dec 9-14. Then a week before our production date, they had to bump us to an undetermined time in Jan. Initially they told us that it was because they could not get our cartons in time. We called the carton manufactur and they said it would not be a problem. We then told the co-packer that we could get the cartons for them.... They then told us they still could not put us on the line, because somebody else was already in scheduled for that time. (we were originally supposed to be scheduled for that time)

Basically we feel that because we are a small new company, they kept giving our production slot to a bigger company.

In Dec, After we got bumped to Jan, we termanited our agreement with the company to package. We went to the packer and picked up our ingredients and asked for a return of our funds. They said we could not have them today, but it they would send them to us next week.

At the end of two weeks, they told us they could not pay us until Jan because they had to reconcile the books. Then in Jan they told us they needed until Feb to pay us because they still werent done with reconciling the books.

Of note: When we termintated our agreement, the company told us they were glad we were leaving, and they did not like working with us.

We have since heard rumers that the co-packing company is in financial trouble. We are wondering if they took our deposit to pay for another company's bill. Also we feel that when they said they could not get cartons, it was because they did not have the funds to pay their bill there. (no evidence other than we have heard the carton manufactures saying they arent being paid).

So it is February and we have yet to see our money back. What recourse do we have? I have done some reading and wonder if we could sue them for fraud? (selling or collecting deposits for something they were unable to deliver)
Submitted: 2 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 2 years ago.

bizlaw :

YOu want to sue them for return of your deposit for not performing the contract. I suggest you do this immediately to try to get a judgment and to levy on their assets. If the rumors are true they may file bankruptcy and you would then have to wait a lot longer.


If this answer is responsive to your question, please accept it. That is how we are compensated. I would also be appreciated if you provided feed back on your view of the answer. Finally, if the answer was especially helpful you can provide a bonus. If I can be of further assistance or you have other questions in the future you can ask for me and reach me at this site.


This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.

Customer:

Is there any chance we could push for fraud charges. I know we could be awarded 3x the amount of damages for fraud.

Customer:

can we sue for more than the $16k that they are holding? I know that if we hire an attorney we will spend a good portion of this just to take them to court. I am also looking at ways to try to settle this out of court. If I could threaten fraud suit, I think that I could get a better response from them.

Customer:

To be clear, I am not trying to get more than they owe us. I just want to find some leverage to make it more benificial for them to settle out of court.

bizlaw :

There is nothing that says you will not tell him that you will include a fraud claim in the complaint which you can do. Whether you will win on that is questionable but you can allege it.


If this answer is responsive to your question, please accept it. That is how we are compensated. It would also be appreciated if you provided feed back on your view of the answer. Finally, if the answer was especially helpful you can provide a bonus. If I can be of further assistance or you have other questions in the future you can ask for me and reach me at this site.



This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.


Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8901
Experience: 30 years of corporate, litigation and international law
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Richard - Bizlaw
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