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Timothy D. Smith
Timothy D. Smith, Attorney
Category: Legal
Satisfied Customers: 1921
Experience:  10 years practicing IP law and general litigation
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I am a small CD label and I received several purchase orders

Customer Question

I am a small CD label and I received several purchase orders from a major US distributor.

The amount is several thousand dollars worth of orders, but we never signed a contract. he said 'I will buy all you can send' and he made an order almost immediately and continued so fore several months but never paid me. I called him and he said he will not do so. He never really pushed the CDs he just kind of took them and put them in a trade mag which no one reads.

After talking to him, he said the CDs did not sell 'as fast as he thought' (which was never part of our discussion) so he wants to pay me only for what he sold which is $400.00. We did not have a contract and he also said now it is their rule that if sales do not total $2000 he does not really have to pay me anything. They are located in California, my company is based in Wilmington.

Do I have the legal right to demand (politely) for full payment of purchase orders, and if they refuse, can I sure him for the total of the Purchase Orders?

Thank you in advance for your help. Below is his 'offer'

'I have had time to consider this and look at sales closely.
I do believe we are not a great fit and I want give you the chance to move on early

I am requesting a check be made for 400 dollars. This is what we have sold since May

The balance we can give you back the product we have and I will send a return request.

We can pick the product and ship it to you with a UPS account number you provide
or you can pick it up the next time you are in LA ..just give me a weeks notice

My suggestion to you would be to open am Amazon Advantage account a..95 % of your sales will come from them anyway

I am sorry this didn’t work out but better to change course now instead of forcing things is how I see it'
Submitted: 1 year ago.
Category: Legal
Expert:  Timothy D. Smith replied 1 year ago.

I hope this message finds you well, present circumstances excluded. Even when a written contract is not in place, you can have a verbal contract, which still has the same force and effect. The problem with a verbal contract is that it is typically harder to prove in a court of law, but it is not impossible.

 

In order to show a verbal contract, you must be able to prove the following elements:

(1) You must be able to prove an offer (in this case, you offer your services for sale);

(2) Acceptance of the offer (he made the request for the product); and

(3) Consideration (this is money paid or work performed).

 

Based on what you have told me, it would seem that you have all of the elements of a verbal or oral contract in place and likely can prove the elements both through emails cataloged as well as through shipment receipts and the like.

 

Even though you have conversed with this individual numerous times, I would advise you to place him on official legal notice via certified mail with a return receipt that you intend to sue him for the remainder if he does not pay. You may want to recite the elements above and how you intend to prove them. Give him another bill for services as an attachment to the letter. Give him a reasonable amount of time (like 10 business days from the date of the letter) to make a payment in full. Tell him if he does not, you intend to file suit against him and not only seek what is owed but also punitive damages and attorney fees.

 

You should be able to file suit against him in your home state if he has ever availed himself to the state (if he has ever conducted business with someone in your state). Since you are located in different states, you could also sue him in federal court as well under diversity jurisdiction. Depending on the amount in question, you could even file suit in small claims court potentially.

 

In short, it appears you have a solid verbal contract and that this person is in violation of that contract. If he fails to pay the amount in full, you need to file suit against him. It is good practice to place him on official legal notice via certified letter with a return receipt. This will be good evidence on your behalf before the court to illustrate your attempts at reasonableness and only using the court system as a means of last resort.

 

Let me know if you have any additional questions or comments.

 

Best wishes going forward.

Customer: replied 1 year ago.

I hjave email orders in writing, oral conversations, but also written purchase orders with quantities, prices, etc.


So back to my original question, is a purchase order an equivalent to a contract? If so is it an exact equal?


 


If it is not, how much legal power does a purchase order have as far as legal proof of an agreement on a scale of 1 to 100? I ahev the purchase orders attached to emails so I can prove they were sent by him, and until I aksed him to py, there wa no question as he would not pay.


 


He has never been to colorado and I will be in California, so it is easier for me to sue him there. He is in Sacramento; do I have to go to Sacramento or can I sue him in small claims court in LA? Also, what is the limit for small claims court and can I split it into two cases if the amount exceeds the limit. Is this small claims court material or do I need a lawyer. if small claims court is acceptable, can you give me a laundry list of what I need to bring?


 


Can you also give a sample of a letter to send him for small claims? (If I use a lawyer I would assume that the lawyer would send the letter. )


 


Thanks again in advance for your quick answer.

Expert:  Timothy D. Smith replied 1 year ago.

So back to my original question, is a purchase order an equivalent to a contract? If so is it an exact equal?

It is the equivalent to a contract in that it is your offer, his acceptance and request and authorizes you to perform work, which is consideration.

 

He has never been to Colorado and I will be in California, so it is easier for me to sue him there. He is in Sacramento; do I have to go to Sacramento or can I sue him in small claims court in LA? Also, what is the limit for small claims court and can I split it into two cases if the amount exceeds the limit. Is this small claims court material or do I need a lawyer. if small claims court is acceptable, can you give me a laundry list of what I need to bring?

 

You can sue him in California and it needs to be in the jurisdiction in which a substantial portion of the activities regarding the deal took place. The claim limiting amount in California small claims court is $10,000. You cannot file two separate actions to get around that amount. He would simply file a motion to consolidate based on same transaction or occurrence and it would negate both actions potentially. Moreover, the court would not allow this to take place.

 

This is small claims court material and can be settled by a small claims court. That being the case, it is always best to have an attorney you trust representing you in the matter. However, you must also weigh the costs of an attorney relative to what you stand to gain (or lose). At that point, it is a simple cost/benefit analysis...really a business decision. In short, hiring a lawyer is always more likely to end with a favorable result, but this is something that can be handled by you in small claims court.

 

You need to bring with you any and all evidence you have of the deal, including but not limited to, purchase requests, receipts, emails, your certified letter, affidavits of you and your employees of the work performed, etc. You need to concentrate on those elements listed above and what evidence you have to prove those elements.

 

Can you also give a sample of a letter to send him for small claims?

 

John Doe

XXXXXX

XXXXXX

 

RE: Invoice For Work Performed

 

Dear XXXXX:

I hope this letter finds you well. I write to you to place you on official legal notice that you are in material breach of our verbal contract and to demand payment within the next 10 business days from the post mark of this certified letter.

As you know, for a valid verbal contract to be entered into by two parties, there must be an offer, and acceptance and consideration. (you may want to attach a copy of the purchase order and state "Please See The Attached Purchase Order"). This purchase order and the worked performed by my business as consideration are evidence of our agreement.

You are clearly in breach of this agreement and currently owe my company $XXXX (Please see the attached invoice). Your attempts to make partial payment and return inventory are not acceptable under the terms of our agreement.

If you do not make payment for the full amount of the invoice within the next 10 business days, I will have no choice but to bring a law suit against you for what is owed. As you know, we have more than ample evidence to prove our claim against you. In addition to making a claim for the amount owed, if forced to file suit we will also seek court costs, attorney fees and even punitive damages.

At (name your business) we pride ourselves in delivering a quality, satisfactory product to our clients. We pride ourselves on honesty, integrity and dignity. We do not associate with companies or individuals that do not aspire to these attributes as well. Moreover, we will defend our rights zealously when infringed upon. As such, we respectfully XXXXX XXXXX request that you make prompt payment so as to avoid litigation on this matter.

Feel free to contact me at any time. However, from this point forward, please only make contact in writing via letter or email.

Sincerely,

Charles

 

Let me know if you have any additional questions.

 

 

Timothy D. Smith, Attorney
Category: Legal
Satisfied Customers: 1921
Experience: 10 years practicing IP law and general litigation
Timothy D. Smith and 4 other Legal Specialists are ready to help you
Customer: replied 1 year ago.

Thank you for the seasoned advice--EXACTLY what I needed and well explained.

Expert:  Timothy D. Smith replied 1 year ago.
Best wishes, my friend!

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