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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10604
Experience:  30 years of corporate, litigation and international law
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If I signed personally for a loan for a license agreement opposed

Resolved Question:

If I signed personally for a loan for a license agreement opposed to a franchise agreement, with a company in Ohio, to open a business and I am in California, Is the interest rate in questions for Ohio or California. In regards XXXXX XXXXX Would that be the 21% for Ohio or 10% for California?
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Submitted: 8 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 8 years ago.
Did you make the loan from a person in California? Was that person unrelated to the Ohio Company? Did you take a personal loan and disclose that it was for business purposes. How much were you borrowing?
Customer: replied 8 years ago.
The main office for the business where you purchase the license agreement to run a retail business, is located in Ohio. I purchased a territory in Pasadena, CA. to run a business utilizing their business plan and requiring me to pruchase all of my products from them. Like a franchise, but just a license agreement. They charged 20% interest. $30,000 fee, 10,000 deposit, 20,000 note with 4,000 interest.
Expert:  Richard - Bizlaw replied 8 years ago.
How did this business opportunity come to your attention? For example were you solicited in CA or did you see their literature and contact them in Ohio?
Customer: replied 8 years ago.
They advertised on Career Builders or for Owner/manager in Pasadena, CA
Expert:  Richard - Bizlaw replied 8 years ago.

California law will probably apply to the transaction. However, since this is for a business and not personal or family use, the 10% usury rate is not applicable. The commercial rate is applicable which is higher. However, there are a lot of exemptions from the usury law depending upon the nature of the company making the loan and the transaction. You would have to review those exemptions to see if they were applicable to your situation. In a business context, usury defenses are hard to make.


To determine whether the loan was usurious, you would have to know the nature of the business, whether it was qualified in CA and also the relevant documents governing the loan would have to be reviewed. For example the documents may apply Ohio law. You would then have some pretty complex issues to evaluate to determine whether CA should apply rather than Ohio law nothwithstanding what was in the documents.







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