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JPEsq, Attorney
Category: Business Law
Satisfied Customers: 5106
Experience:  Experience as both in-house and outside counsel in general business and transactional law
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a client of mine lost money that they had collected in the

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a client of mine lost money that they had "collected" in the form of credit card payments, because our software did not automatically settle non-tipped cc transactions. The money was lost because they didn't reconcile their daily payments against deposits for over 70 days. Who's liable here?
Was there a glitch in the software? Or is it always the case that if the daily payments are not reconciled this will occur? Also, was the debtor ultimately charged, I mean, where did the credit go?
Customer: replied 7 years ago.
A glitch? It's arguable, but I suppose so. I think one could expect that non-tipped transactions would have automatically been settled, although tipped transactions (tips being a new function we added) needed to be settled manually. Reconciling would have made us aware of the issue, and had it been done within 30 days of the update we would have been able to settle all of the transactions. Because they went over 70 days without reconciling, the authorization for several transactions had expired, so in some cases the credit card used to make the purchase was never charged.

Ok. Well I cannot tell you for certain who would be responsible. I can tell you that it will come down to the issue of whether this was teh fault of the user or the software.


I know nothing about this software, but if it is true that the user would have a reasonable expectation that the transactions should have settled automatically, you could argue that the software company is responsible for the loss.

Otherwise, the consumer is responsible. Even if it is the fault of the user and/or the software, teh consumer is still responsible. Just because there is a cc processing error, regardless of fault, the consumer still owes the debt, as they have the benefit of the service.


If you have been unsuccessful collecting from the consumer, you could try laying fault on the software, but it would require a lawsuit.

Customer: replied 7 years ago.
I am the software developer. The merchant looking to sue us was our client. They are a retail operation and unable to locate all of the customers that were never charged for goods received. I'm curious, that because they did not do any form of accounting in their business if that makes them negligent and at least partially responsible for the lost money.

I see. I assumed you were the software user. My mistake.


It is a question of fact, only a jury or judge can answer the question, and the answer could be different every time you litigate it, which is why I cannot answer you definatively.


So the issue boils down to whether the merchant was negligent or whether the software was faulty. I don't have the answer because it is a question of fact.


But it is probable that the merchant's own negligence would have at least contributed to the problem. In some State's that completely precludes them from recovery. But in a majority of States, the award would be split according to the assignable negligence of each party.


So if $100k was lost, and it was 25% the fault of the merchant, the award would be $75k.


I cannot assign a fault percentage, but it does sound like the merchant had a great deal of control over this, and will end up carrying a large portion of the blame.


Which State is the merchant in? Or was there a forum selection clause in the contract?

Customer: replied 7 years ago.
The merchant is in Florida. We are in Indiana. We have a forum selection clause for Indiana, but if you could let me know for both, I really appreciate it!! btw, if I click accept, will you still see my reply? Should have asked last time. Don't want to seem like I'm stringing you along!

You can ask follow ups after you accept. I will still be able to see and I will still respond.


I am in Indiana, it is a comparative negligence State, which means the award is divided by fault (the merchant's negligence is NOT an absolute bar to recovery).


Florida is also a comparative negligence state.

JPEsq and other Business Law Specialists are ready to help you
Customer: replied 7 years ago.
Thanks, XXXXX XXXXX appreciate your help. I'm in Indianapolis. You?



No problem

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