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Franklin, Attorney
Category: Business Law
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Frankin I have a canadian business that I have dealing with. I

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I have a canadian business that I have dealing with.
I do not have a 'contract' or purchase order with this company yet.
But we have a long involved tecnical sale in the work in which...
1. They have made very specific offer and pricing.
2. I have accepted their offer.
3. I have relied on their proposal to me in my contractual dealing with others.
4. They have now unilaterally decided that they are not going to fullfill their previous agreement.
5. I am going to be damage for about $75,000 if they back out.

In the past, I have undersood that the terms of an ageement can be established without a 'signed contract' or executed PO.
How would that apply here ?

Also, There is an broker that is representing the Canadian company that is somewhat idependent that put the deal together.

How should I proceed and do I have a case? or chance of recovery?
Good morning, William,

Thanks for requesting me. Here's my detailed analysis of your situation.

First, you absolutely have an agreement and a cause of action against the Canadian company.

An agreement does not need to be established with a signed contract or executed purchase order, although the existence of those will certainly help prove the existence of a contract.

An agreement exists where there is:

1. An offer,
2. An acceptance, and
3. Consideration

1. An offer exists. They made a very specific offer and stated pricing terms.

2. An acceptance exists. You accepted their offer, and started work.

3. Consideration exists. Consideration is anything of value promised when agreeing to an offer. It doesn't have to be money. Consideration can simply be a promise to start work, or draft some plans. Because you have started work, then consideration exists.

Under U.S. law, you have a contract. And because the Canadian company is doing business within the U.S., it is subject to the same laws that U.S. business's abide by, and will have to answer for its actions in the U.S.

Second, now that we've established that an agreement exists, and that you have a cause of action, the difficult part is establishing proof of that agreement, because, as you stated, there isn't a contract or purchase order in existence.

I'd recommend that you immediately start archiving and retrieving all information, materials, and correspondence that you've had with this company, both electronically and otherwise, and start saving it in a safe location. Print out copies of any emails that you've had with the company, and try to find specific areas where you believe a contract has been formed. Look for language such as "I'll begin work," "Okay," or "agree," and highlight those areas. An agreement can even be verbal, so look over phone records or phone messages for evidence. These documents will be important to establishing existence of a contract should litigation begin.

In addition, start archiving all materials that you've had with third parties, such as contracts, purchase orders, etc., that will show damage to yourself of $75,000 if the Canadian company does not fulfill their agreements. These materials will be important to establishing the existence of damages should litigation begin.

Third, after you've gathered your materials, draft a letter to the Canadian company stating that they have breached the contract, and that they are liable for damages. This is what's known as a "demand letter." State the amount of damages that you're looking for (and feel free to overestimate here, because I'm sure that your loss of time, fees, and possible reputation damage, are all significant as well.) Include some basic proof, if you feel it's necessary. Feel free to negotiate in this stage. If they're willing to pay your requested damages, some other negotiated sum, or continue with the contract, then feel free to settle with them on terms that are acceptable to you.

Fourth, if they refuse to pay, or if the matter hasn't come to a satisfactory conclusion at this point, then now is the time to involve lawyers. I've done my best today to provide a preliminary analysis based on the facts you've given me. However, your matter is complicated, and will probably require legal assistance beyond what online experts can provide. I’d recommend that you contact a local attorney that's familiar with suing international companies, so he or she can guide you through this process. The cost of a lawyer will be well worth it, because you’ll be able to more effectively reach your goals.

To summarize, I believe you have a strong case, especially given your reliance on the agreement to make other deals. If you can prove the two elements that I laid out above, which are 1. proof of an agreement, and 2. proof of damages, then you have a very good chance of recovery.

I'd try to get this situation resolved amicably first with phone calls or emails, and then with a more formal demand letter, as described above. Once you get lawyers involved, there's no turning back. And once again, don't worry about the logistics of litigation, because the lawyers will take of that, should it come to that point. Feel free to sue the Canadian company in whatever location is more convenient for yourself.
Franklin and 4 other Business Law Specialists are ready to help you
I sincerely enjoyed answering your questions on If you have any more questions, or would like to follow-up, feel free to stop by and chat. To request me in the future, simply write "Hi, Franklin" before your question.

Have a great day!

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