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My signed with a company in Michigan as a Board Adviser. I…

My signed with a company...
My signed with a company in Michigan as a Board Adviser. I was going to have the opportunity buy warrants in exchange for advice. I was not able to bring in the funding they wanted as a start-up so they became more aggressive and I broke off ties. Now hey are planning to sue me. Our agreement did not stimulate any actions or repercussions if I did not bring in the funding. what is my liability
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Answered in 29 minutes by:
9/23/2017
J. Warren
J. Warren, Attorney
Category: Business Law
Satisfied Customers: 2,250
Experience: Experience in general business transaction and formation matters.
Verified

Hello and welcome to JustAnswer. My name is ***** ***** I am an attorney who will try my very best to help with your situation or get you to someone who can. Please note: This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

I am sorry you are dealing with this situation. A persons liability in a breach of contract is limited to the economic loss that the party can prove. This is referred to actual damages as a result of the breach or termination of the contract. Often times when it would be difficult to determine economic damages. Absent language in the contract, the burden is on the suing party to prove they suffered an economic loss.

However, the party must first establish that there was a breach of contract. If the performance of the contract is based on a condition (i.e. one party obtaining funding) and that condition is not met after good faith efforts, then arguably a breach did not occur because the condition could not be met in order for performance to occur.

In short, they have to prove a breach of contract occurred and if so then your liability would be limited their actual damages that they can prove (not speculate) they loss as a result of you breaking off ties.

If you actually are sued, you should retain a local lawyer immediately to deal with the suit and hopefully put an end to the nonsense.

All my best and encouragement. Thank you for allowing me to help you with your questions. I have done my best to provide information which truthfully addresses your question. Please note: If I tell you simply what you wish to hear, this would be unfair to you. I need to be honest with you and sometimes this means providing information that is not optimal. Negative ratings are reserved for experts who are rude or for erroneous information. Please rate me on the quality of my information; do not punish me for my honesty. Kindly rate my answer as one of TOP THREE FACES/STARS and then SUBMIT, as this is how experts get credit for our time.

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Customer reply replied 9 months ago
Am I able to provide you the agreement to review and determine what you think?
Customer reply replied 9 months ago
Please let me know if I send you the agreement

I am not able to do that at this time, but I will opt out and open this up to the panel of lawyers that may be able to assist you with the review. This may take a few minutes. Than you for allowing me to assist you.

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Customer reply replied 9 months ago
please turn it over to the board
Customer reply replied 9 months ago
or panel
Law Educator, Esq.
Category: Business Law
Satisfied Customers: 125,313
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Verified

Thank you for your question. If you would upload the contract to see what you are bound for and what the breach and termination provisions are, we could answer your specific questions YOU POSE to us about that contract.

Please understand, we are working with multiple customers at the same time, so our responses to you may be delayed as they all deserve the same time you deserve. Thank you for understanding that.

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Customer reply replied 9 months ago
Advisory Board Agreement Attached

Thank you for your reply.

So, the contract says that you "shall" provide one investor every three months at $25,000 each. You said you received a communication from their attorney, what was the communication and also if you could, what are your specific questions about this agreement?

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Customer reply replied 9 months ago
I was to seek funding of $25000 and in exchange be able to provide options to buy warrants. I was not able to obtain that funding an no warrants were exchanged. What is my liability now.

The only provision the contract states for not complying with the terms is under Section 3.2, Termination, which states you can be removed as an advisor for breaching the terms of the contract and that upon removal some of the terms of the contract continue to apply beyond your termination.

The contract does not state any other penalty for breaching the contract. So according to this contract, if you cannot comply with the terms of your obligations, they can remove you and you would not be entitled to any warrants as promised in the contract.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

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You said you received communication from their attorneys, what are they threatening you with?

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Customer reply replied 9 months ago
They are seeking $10,000 in damages
Customer reply replied 9 months ago
I never advised them to begin spending without funding and the manager would never let me have contact information or even the names of the other advisers.
Customer reply replied 9 months ago
I contacted over 35 investors seeking funding and have it well documented.
Customer reply replied 9 months ago
I always spoke with one person and never had the opportunity to speak with anyone else even though I requested this on numerous occasions.

The contract does not provide for damages for breach. Since it does not provide for damages for breach of contract other than termination as an advisor, in order for you to be liable to them, they would have to actually prove the damages they incurred. If they can prove they incurred damages as a direct result of you breaching the contract, then they could potentially recover those damages from you. However, the contract is very vague other than you agreeing to provide the 1 investor every 3 months and does not impose any such penalties.

So, without any breach penalty in the contract, all they can collect from you is damages they can prove that occurred ONLY from your breach of the contract, not for any incidental or peripheral damages. If they are seeking damages that you did not personally cause them and were not specified in the contract, they have to prove how you caused this $10,000 in damages. If they cannot do so and are making this demand, you need to get a local attorney to respond to them regarding your lack of liability under the contract and demanding proof of how they claim you caused them these damages by your inability to find investors into their company.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

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I see you asked for a phone call, do you still require one?

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Customer reply replied 9 months ago
No! I am good now.

Thank you for your reply.

If you have no further questions, please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

Law Educator, Esq.
Category: Business Law
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Experience: All corporate law, including non-profits and charitable fraternal organizations.
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