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Law Pro
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Category: Business Law
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Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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arbitration for $28k in owed services?

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i'm a california LLC - a web consulting agency - contracted to a delaware C-corp for some service work. they are unable to come up with the money owed ($28k). services were fully delivered.

 

there's an arbitration clause (in san francisco) in the contract. what are the pros/cons of exercising the clause? it's a one man show on both sides, so piercability on both sides is a concern.

 

please call with any questions XXX-XXX-XXXX

Submitted: 6 months ago via Cornell Legal Info Institute.
Category: Business Law
Expert:  Law Pro replied 6 months ago.
I am sorry that I don’t have better news, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers, even when an answer is not favorable to the customer.

Why do you say "pierceability is a concern on both sides"?

I would take the company to arbitration in San Fransico - asap.
Customer: replied 6 months ago.

unsure if my previous reply was added, so i will add again. apologies in advance for any redundancy


 


----


 


reasons for piercability question:


 


- customer is a delaware c-corp, with possibly no money in the company


 


- what are options for actual recovery (ie $$ in my bank) in case of judgement for me


 


- do you know avg cost of arbitration for similar case in sf, ca


 


- can we recover arbitration costs n case of favorable judgement

Expert:  Law Pro replied 6 months ago.

Thank you for that additional information.


reasons for piercability question:


 


- customer is a delaware c-corp, with possibly no money in the company


That does mean that the corporation veil will allowed to be pierced. Parties are allowed to contract - breach of the contract itself does not afford the remedy the court piercing the corporate veil.

 

The courts will allow the piercing of the corporate veil in extenuating circumstances - when there has been fraud, undercapitalization, not keeping with the formalities of the corporation, commingling of funds, etc.

 

But just because the corporation breached a contract - the presumption is - that a court won't pierce the corporate veil and hold the owners personally liable.

 

The rational is - that you knew who you were contracting with OR could have demanded personal guarantees.

 

 


- what are options for actual recovery (ie $$ in my bank) in case of judgement for me


 

The options are tough - that if you get a judgment against the corporation there may not be any asssets to pay you with. The corporation may file bankruptcy which would then discharge any judgment you got against them.


- do you know avg cost of arbitration for similar case in sf, ca


 

 

Because it's a simple breach of contract - the arbitration shouldn't take long at all. I would have to say between $2k and $4k.


- can we recover arbitration costs n case of favorable judgement

 

No, not unless it's in your contract that the prevailing party can recover their legal fees and court costs. Otherwise, in the USA - unless there is some statute saying the prevailing party can recover their attorneys fees and court costs - each party bears their own costs.

 

 

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Law Pro, Attorney
Category: Business Law
Satisfied Customers: 22747
Experience: 20 years experience in business law - sole proprietor, partnership, and corporations
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