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legalgems
legalgems, Lawyer
Category: Legal
Satisfied Customers: 15523
Experience:  Just Answer consultant at Self employed
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I have a services agreement contract with a company that has

Customer Question

I have a services agreement contract with a company that has a 1 year agreement of which we're 6 months into it, paid on a monthly terms. We'd like out of it because we're not satisfied with their services. We've attempted informal mediation with them to no avail. The LLC is has been dissolved that the agreement was filed under. Is that usable to imply the contract is thereby null and void?
JA: Can you tell me what state the LLC is registered in?
Customer: California
JA: Has anything been filed or reported?
Customer: yes.
JA: Anything else you want the lawyer to know before I connect you?
Customer: no, it's pretty straight forward.
Submitted: 1 year ago.
Category: Legal
Expert:  legalgems replied 1 year ago.

Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

Expert:  legalgems replied 1 year ago.

I am sorry to hear this;

how was the LLC dissolved (ie bankruptcy, winding down etc)?

did the partners of the LLC personally guarantee the contract?

Customer: replied 1 year ago.
The business (original LLC on the service agreement with the provider) was purchased by another business, and no, the partners did not personally guarantee the contract.
Expert:  legalgems replied 1 year ago.

Thank you; under California Corporate Code 1107a, the successor is typically liable for prior obligations absent an agreement to the contrary; please see here

That is also discussed in Ray v. Alad, 19 Cal 3d 22 here

So it would come down to the agreement addressing the purchase of the LLC as to which entity is liable.

If a seller retains liability by not addressing it in the LLC sale agreement the seller can be liable.

If the service provider is in breach of the contract by failing to perform or by negligently performing that can be asserted as an affirmative defense; it must be asserted in the answer or it is deemed waived.

please see:

http://www.courts.ca.gov/partners/documents/2011SRL5eADContract.pdf

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Customer: replied 1 year ago.
Thank you for the research. There is a clause that states: "Termination for Convenience. Either party shall have the right to terminate this Agreement immediately at any time for any reason or no reason upon thirty (30) days written or electronic notice to the other provided, provided, however, that if Customer terminates this Agreement for convenience, (company) shall not have any obligation to refund any pre-paid fees, and any fees that have not been pre-paid by Customer shall be immediately due and payable to (company) If (company) terminates this Agreement for convenience, Customer shall receive a pro rata refund for fees pre-paid in respect of the period after termination." If we're paying fees for the remaining portion of the contract following a request for termination for convenience, does the last sentence imply we'd receive a refund of any sort?
Expert:  legalgems replied 1 year ago.

That is contradictory as the first half states if customer terminates, company need not reimburse pre paid fees; but if company terminates (versus customer) then any fees not pre-paid shall be immediately due.

There is a legal doctrine-in contra proferentem-where ambiguous/unclear/contradictory terms are construed against the drafter since they are the ones causing the ambiguity.

Also that addresses for convenience issues, versus the company breaching the agreement by non/negligent/subpar performance.

Customer: replied 1 year ago.
Meaning, I, the customer, stand a shot of getting out of the contract because there terms listed within that clause are ambiguous/unclear/contradictory?Could you clarify this for me please: Also that addresses for convenience issues, versus the company breaching the agreement by non/negligent/subpar performance.Thanks so much for your assistance! Following this clarification, i won't bother you any further :)
Expert:  legalgems replied 1 year ago.

Yes, that is correct;

cancellation for "convenience" means the party is unilaterally and WITHOUT reason/justification canceling the contract;

but if the provider performs negligently, or fails to perform, that is generally considered a breach, which allows the customer (if it is a material-ie significant -breach) to nullify the contract (and to sue for damages should the customer, for example, incur third party expenses to rectify any negligent work/services performed by company).

I think that addresses it but if you need further clarification please don't hesitate!