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Dave Kennett
Dave Kennett, Attorney
Category: Business Law
Satisfied Customers: 27686
Experience:  25 years practicing law
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I have a product for sale that a vendor wants to buy. He has

Customer Question

I have a product for sale that a vendor wants to buy. He has need of 2000 units shipped right now but wants to pay in five installments. He has offered to send me 5 checks dated for the first of every month to be cashed after the first of every month starting with April ending in August. Should I ship 100 o/o of the order and accept post dated checks.
Submitted: 1 year ago.
Category: Business Law
Expert:  Dave Kennett replied 1 year ago.
Dear JACUSTOMER - I cannot make a personal business decision for you but I can offer you an overview of the situation so you can make your own decision. If you agree to sell on this basis it is no different than offering him 5 months of credit for free. A post dated check is legally a promise to pay just as though you sold the goods on credit. Most businesses sell on terms of around net 30 days and after that charge interest on outstanding balances. so in your case you would be giving four additional month interest free. If that's what you want to do there's nothing illegal about it but you are taking a risk that if the checks turn out to be no good you will be faced with filing a suit for the money since he will already have the goods. The other option would be to ship the goods in segments as the checks are made good or at least so that you are not owed for more than a 30 day supply and then if a check bounces you would only be out one month's supply rather than a possible 5 month supply. As I said, you have to make the business decision since that is not a legal matter.
Customer: replied 1 year ago.

I wanted know how the contract or agreement would be handled under the law so I could make the decision. I Googled post dated checks and saw they where not treated as bad checks under Florida law but wanted to know what legal rights I had if the vendor didn't make good on the post dated checks.

Expert:  Dave Kennett replied 1 year ago.
Your legal rights would be the same as if you sold him on a credit basis and he didn't pay. You would have to sue him for the money owed in the local court. The post dated checks mean absolutely nothing other than as a matter of convenience of getting paid if the checks are good.
Customer: replied 1 year ago.

I guess I should have asked what happens when someone doesn't pay you for product you sold them on credit

Expert:  Dave Kennett replied 1 year ago.
The answer is the same. You have to sue them for the money. It's the only way to recover money from someone who owes you, either from a loan or from the sale of products. The post dated checks are similar to a promissory note and evidence of the debt but if he doesn't pay you have to file a suit and get a judgment.
Dave Kennett, Attorney
Category: Business Law
Satisfied Customers: 27686
Experience: 25 years practicing law
Dave Kennett and other Business Law Specialists are ready to help you
Customer: replied 1 year ago.

Relist: Other. expert should have seen where this was going if I didn't ask the question as specifically I should have the answer should have be specific enough to explain the question I really needed answered.

My question concerned selling to someone who payed with 5 postdated checks after they received all the product. the answer said it was like giving them credit.

 

What is my protection under Florida law if I sell something to someone on credit and they don't pay

 

I didn't see the final answer from Mr. Kennett before I requested this follow up.

He has answered my question satisfactorily. Thank you.

Expert:  BizIPEsq. replied 1 year ago.
I generally agree with my colleague but let me bring a different perspective.

Holding 5 post dated check is a risky proposition in that the person may not have the funds available to cover the checks when they become due, while at the same time the goods you shipped will be gone by then.

If the checks are company checks, what I would do is ask for a personal guarantee from the person. That way if the checks bounce at least you will be able to collect against the person and go after his/her personal assets.

If the checks are personal checks I would ask the person to bring another person to act as a secondary guarantor. That way if the person ends up being a dead beat you would have another person to go after.

In addition, to the personal guarantee, you should include a Confession of Judgment as part of your agreement. A Confession of Judgment basically gives you a short cut in court and allows you to skip trial and go straight to a proceeding that affirms judgment for the amount of the goods. In essence you act as the person's attorney and enter judgment (which was pre-signed by the person) on their behalf.

Finally, you should consider securing the items with a UCC-1 filing and while your at it if the goods can be reposesed, make sure your agreement with the person permits you the right of entry and repossession (needs to be coupled with a UCC filing).

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Expert:  BizIPEsq. replied 1 year ago.
Kindly leave a positive rating for my response. Without it I do not get credit for my time. Thank you.

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