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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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My companys 5 year energy supply contract was transferred

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My company's 5 year energy supply contract was transferred another supplier because it went out of business. We didn't sign a new contract but have been paying invoices from them. We never gave our written consent to have our contract transferred.   We recently signed another contract for a lower rate with a 3rd supplier and got a bill for liquidated damages from the other supplier. We don't think we should have to pay it because of some contract wording. It states "This Agreement shall inure to and benefit the Parties hereto and their permitted successors and assigns. Neither Party may assign this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the above, Strategic Energy may, without the consent of Buyer, assign this Agreement and Its rights and obligations hereunder to a third party for the limited purpose of securing credit and financing." Cannot fit the rest in. Pls help
Are you trying to get out of paying the liquidated damages?
Customer: replied 8 years ago.
Yes.
My apologies, your "already tried" section did not appear as I read your question.

May I ask how long you had left on the contract with the original company? (That is, you stated this was a 5 year contract--how much time elapsed?)
Customer: replied 8 years ago.
It was signed in 2006, so I'd say about 2 to 2.5 years left.
First of all, no matter what the contracts generally say about assignments (whether the contracts allow them or not), courts generally give parties freedom of assignment. So if your contract was assigned to the new parties who were contracted to provide the same service, unless you had an extremely specific, unique, and non-transferable project, you are obligated to perform. The other party, in essence, "steps into the shoes" of the old party.

What that means, however, is that their rights are no bigger and no smaller then what you originally contracted for. Is that section from the new agreement that they sent you? If so, since it was unsigned, it is invalid. Find the old agreement that you had with the original party and look up their conditions on assignment. They may (and most likely do) have their own liquidated damage provision. Find out what it says, and what it does not. If there is no liquidated damage provision, the new company cannot sue you for them. If there is, find out what it covers--and if you have already received a bill, demand a breakdown of what it entails. Courts are generally very unhappy with companies who try to charge extraneous fees and things in their liquidated damage provisions.

I hope I was able to give you a starting point. Please don't hesitate to message me should you have any other concerns.

Sincerely,

Dimitry Alexander Kaplun, Esq.
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Customer: replied 8 years ago.

That section was from the original supplier's contract, not the one that took over from it. We never were asked to sign a new contract with Direct Energy. The only contract we have is the Strategic Energy contract, our original supplier. Liquidated damages is not spelled out in our original supplier's contract. It doesn't even state what it means, and what the math is. The contract states any liquidated damage bills we receive must be accompanied by a full accounting of the charges. What I got from a customer service rep was this reply:

"The calculation for early termination fees is more complicated than just a formula.

Using one generic formula, we take the original contract price - today's current market value = the difference in price per KWH.

We take the difference in price per KWH and multiply the remaining usage, of the remaining term.

Since we bought the energy in advance, this is a calculation to see what our potential loss is."

 

Should I also ask them for a copy of our original contract? if they don't have it, then what?

Since they are not providing you with a full accounting, they are unable to proceed. As per the stipulation, a full accounting is required. Plus, the company also has to mitigate damages. If they are bringing suit for the full remainder of the KWH, then any judge would throw it out.

Ask them for a copy of the original contract. Demand that they follow their obligations as contracted. If they do not, wait to see them in court. Your defense would be based on the fact that you realize you breached the contract, but the other company did not provide you with a reasonable bill of liquidated damages. Should the judge find their behavior egregious enough, they may simply award them nominal damages for your breach. And nominal damages literally equal $1.00.

Good luck.

Sincerely,

Dimitry Alexander Kaplun, Esq.

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