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Legalease
Legalease, Attorney
Category: Business Law
Satisfied Customers: 14511
Experience:  14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
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Issue about terminating Contract

Resolved Question:

i have a question about business contracts. We are an investment firm having managment and ownership interests in hotels and apartment complexes over several states. Several months ago it had come to our attention that one of our employees entered into a contract without the administrative offices aproval. That person is no longer employed with us however being that we have recently adjusted the way in which we attend to our bookeeping practices did we discover that this firm had further cut a deal with the employee that instead of charging us the full price,since we had absolutely zero use for this companies services, and instead of holding us to the full extent of the contract over the next several years they would do us this favor of them charging us only about $200 per month. Our contention is that not only are we not obligated to pay a reduced amount due to them providing no useable service but due to this former employee having no authority to enter into contracts and agreements that we owe them nothing at all after we notify them of this contract executed without our previous acknowledgement or approval. What would our legal responsibility be should this company insisted that they will keep their contract in place and not allow the termination of the contract under those reasonings provided herein.Please note your site allows little opportunity for getting help to procedural related issues having to do with manuevering around your site and asking questions.


So as it is now, i have asked the question, increased the amount as per Just answer.com suggestion and am awaiting your response.

Submitted: 1 year ago.
Category: Business Law
Expert:  Legalease replied 1 year ago.

Hello there.

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I am sorry that it has taken you so long to get an answer (for some reason this question is in the employment law section when it is really a business law question -- I can answer it in either category because those are some of my specialties but there are many attorneys in the employment law category who are not qualified in the business law category so that may be one of the reasons it was here for a while) and I do agree with you about the unwieldiness of some portions of the website -- but when you post such comments here in the question then I am the only one who sees this and all of the lawyers work remotely from the main headquarters. If you direct your concerns to info@justanswer.com or through the customer service section then they can be looked at from the administrative end of things.

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In reviewing your question, can you answer the following questions for me:

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1. What state are you located in (although it doesn't make a huge difference because all 50 states have adopted the Uniform Commercial Code in their laws and this situation falls right into that group of commercial statutes).

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2. This employee who signed the contract -- did he/she sign any of their previous contracts? If not, did the employee sign any other vendor contracts representing themselves as having the authority to do so?

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3. How long is this contract for and if you cut it off tomorrow is it worth so much to the vendor that he would spend the money and sue over it?

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MARY

Customer: replied 1 year ago.

Thanks for the explanation re; the site.


This contract issue occurred in North Dakota.


This woman a former employee did not sign any previous contracts with this company. AND in fact made a lower level employee than she herself, sign the agreement.


This contract as i recall was for several years. Based on an agreement they had made when the employee found the agreeement to be totally useless to us, they reissued a verbal agreement where they agreed to reduce the monthly payments in exchange for us getting a bit out of the contract but still keeping us invoved to the tune of about $240 per month. i would guess the total value of the contract is about $6,000.


So Mary...............it is late now and i will look for your response tomorrow afternoon. Thanks, Harry

Expert:  Legalease replied 1 year ago.

Harry -

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Yes, I have to go offline and will pick this up immediately upon my return.

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MARY

Customer: replied 1 year ago.

Mary,


Excuse the delay please but i now have time available in which i had tuned in to Ask.Com to answer my legal dillema.


After responding to the 3 or 4 questions you posed i had expected a reply but it seems as if you also were delayed as per your response and had responded;


 


"Yes, I have to go offline and will pick this up immediately upon my return"



So have you had the time to review my situation and deliver a response?

Expert:  Legalease replied 1 year ago.

Hello Harry -

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I apologize for this delay. In North Dakota, unless the person has been given actual authority by the company to enter into contracts -- which you say she had no authority - OR she regularly negotiates and executes contracts on behalf of your company and has negotiated and executed a contract with this company prior to the most recent contract, then the vendor has no right to hold you to this contract because she had neither actual authority or apparent authority to negotiate and enter into contracts to bind your company. Under the Uniform Commercial Code in North Dakota Article 9 (UCC Article 9 for short), if an employee regularly performs a certain function for an employer - such as negotiate and enter into contracts - then that would be called a "Course of Dealing" between the two businesses, and the vendor would have the right to rely upon this woman, what she told them and her signature upon the contract. Under the circumstances that you describe above, this company had not dealt with this woman in the past to negotiate and execute their contract and thus they had no right to rely upon her as the authorized employee to enter into this contract. Thus, the contract is not binding upon your company and if you cancel this arrangement you should put it in writing and simply tell them that XXXXXXX has never had the authority to negotiate contracts or to appoint anyone to sign a contract on behalf of the company (do not call it a 'contract' in any written correspondence to them from this point forward because it is not a binding contract on your company) and thus, as far as the company is concerned, the arrangement she negotiated and asked someone else who had no authority to sign is not a valid contract between your company and the vendor. I suggest you tell them that you did not discover this discrepancy until after the woman was terminated or someone in authority with the company would have cancelled it sooner. However, now that it has been discovered our company is notifying you that it is not a contract and we have no intention of continuing to comply with the terms of the contract. Now, because the amount of money outstanding is small, the vendor may not pursue legal action against your company but if they do choose to file a civil lawsuit your company then answers the civil lawsuit in a written answer and you state in the court filing the same thing that you did in the letter -- that under the UCC Article 9 the woman had no actual authority from the company and the woman never established a course of dealing with other companies that she had apparent authority to carry out the negotiation and execution of contracts thus the vendor had no right to rely on that signature and try to enforce it as a valid contract against your company. Now, if this company has actually done some work or provided some services that they genuinely have not been paid for by your company, the court will order payment for that work or service because you do not have the right to be unjustly enriched because of the vendor's mistake in dealing with your low level employee for contractual matters -- but the court will not enforce the contract against your company if they have not done anything to that date and are simply looking for monthly "service" payments going forward.

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I hope that helps. If you have additional questions, please ask them. If not, can you please press the 3rd, 4th or 5th smile face below so I will be paid for my time. I am paid NOTHING unless you press the 3rd, 4th or 5th smile face below. THANK YOU VERY MUCH !!!

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MARY

Legalease, Attorney
Category: Business Law
Satisfied Customers: 14511
Experience: 14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
Legalease and 4 other Business Law Specialists are ready to help you

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