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Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24870
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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Vendor has retained counsel in our county and sued us for 6

Customer Question

Vendor has retained counsel in our county and sued us for 6 month old debt of $70k. We have paid 20% in the last month and want to pay down. Attorney wants us to stipulate to a plan where we will submit to judgment if we miss a payment. Cash flow is VERY tight so we are at risk of missing any plan we agree to. What are our alternatives? Vendor is in midwest. How expensive will it be for them to chase this? Will we necessarily be responsible for their legal costs?
Submitted: 3 years ago.
Category: Business Law
Expert:  Law Pro replied 3 years ago.

Welcome to JustAnswer! My goal is to do my very best to understand your situation and to provide a full and complete excellent answer for you.

My name is Fred and I'm going to assist you with your question.

Please bear with me if you believe my answer isn’t coming fast enough because I’m also working with other customers too. I apologize for any seemingly late response.


Do you have a written contract that you were operating under with the vendor?

When you order products from the vendor - is there a terms of service or anything on the order form?
Customer: replied 3 years ago.

how would you suggest we proceed? Our goal is to set a payment plan and repay every penny, but not be filleted if we are late on a payment or two.


 


Terms on PO and invoice say Net 30. From their boilerplate on their invoice (our PO has no detailed terms) which we didn't sign: "Purchaser shall defend, indemnify and hold XXX harmless of from and against any and all loss. damage, liability and expense including court costs and reasonable attorney’s fees, arising out or any breach by Purchaser or the terms and conditions of this Purchase Order."


 


We aren't trying to stiff them, just continue to pay on our timetable without meeting their request:


Do you want to make a proposal to pay off the amount owing, with perhaps a Stipulation For Entry of Judgment Upon Default in Payment Schedule? The idea would be that no judgment would be entered unless and until YYY were to default in an agreed-upon payment schedule.


 


Of further interest is that they filed in California; their invoice terms say:


CHOICE OF LAW: This Purchase Order shall be construed and enforced pur­ suant to the laws and decisions of the State of ZZZ, as such laws and decisions relate to agreements entered into and to be fully performed therein.


 


JURISDICTION: Venue over any dispute arising under or in connection with this Purchase Order shall reside cxclusively in the state and federal courts located in the State of ZZZ, and Purchaser and XXX consent to the personal jurisdiction of such courts. The parties each waive any objection based on forum non convcnicns and waive anv objection to venue of any action instituted hereunder.

Expert:  Law Pro replied 3 years ago.
That's what I was looking for - a jurisdictional statement.

So it would appear that they named California as the state of jurisdiction and it's laws.

They already filed suit and you have been served with the complaint?

If so, when were you served?
Customer: replied 3 years ago.

Filed in Santa Clara County, California. Our agent of service received a registered letter. The agent said, "We received the Summons and Complaint by mail yesterday, presumably because we are agent for service of process. We did not receive personal service."

Expert:  Law Pro replied 3 years ago.
OK, that would be correct - service of process on your registered agent.


Just to make sure - where are you located or where is your business located?



Customer: replied 3 years ago.

all in Santa Clara County

Expert:  Law Pro replied 3 years ago.
OK.

You asked:

Attorney wants us to stipulate to a plan where we will submit to judgment if we miss a payment.

This is a common request and alternative if you are liable for the debt - it eliminates legal and litigation costs and establishes a repayment plan.

Cash flow is VERY tight so we are at risk of missing any plan we agree to.

I don't know your cash flow situation but you shouldn't agree to a repayment plan unless you can make those payments. Otherwise they have a judgment they can immediately start executing upon - against your inventory, assets, accounts receivable, bank accounts, real estate, etc.

What are our alternatives?

Alternatives are to litigate the matter and win completely, OR win reducing the alleged amount owed, or file bankruptcy.

The products/services they provided may have been defective or they breached the contract somehow.




Vendor is in midwest. How expensive will it be for them to chase this? Will we necessarily be responsible for their legal costs?

 

 

Not that expensive in reality - $5K maybe? They only have to show:

 

1) that they supplied you with products and services at a certain cost and payments were to be made pursuant to the invoice or agreement

 

2) that you defaulted and didn't make those payments

 

3) show their damages or amount owed

 

 

Your defense is that the product or services were somehow defective or that the contract provided for a payment plan or something.

 

 

You would only be liable for their legal fees IF the contract provides for the recovery of legal fees to the prevailing party and if they have to pursue the matter. Most contracts provide for such (the recovery of attorney's fees and litigation costs but I don't know what your contract provides).

 

 

 

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