[jmayer29]

I'm skipping the long detailed story and just getting to the question/point.

My student loans are in collections with a company called ACT "account control technology". Anyone have any experience dealing with them?

My loans have been broken down into a couple different lumps and rather than being handed over to the collection agency in whole so I would only incur penalties one time, I am receiving multiple penalties for each lump of loans that have been handed over....

Well, in the mess of lumps the collection agency has recieved they have recently sent me a settlement letter. On the letter it clearly lists that by paying a certain $$ amount the ENTIRE (all lumps) account would be considered settled and closed. I sent in the amount and they cashed the check. Now they are saying that they made a mistake and are trying to collect again. Does my proof of the records I have kept do me any good, or am I forced to accept the fact they made a mistake on their offer letter and begin sending more payments?

If I need to provide more detail I can, but wanted to see what kind of feedback I could generate first.

[aaron]

How far off was their offer from the balance? Would it be obvious to somebody receiving the letter that they made a mistake? (Even that might not be enough to save them....) And in what state?

Unilateral mistakes do not ordinarily provide a basis to escape a contract, in this case a settlement contract.

[jmayer29]

Thanks for your feedback!

The entire account shows a balance of 30k on the settlement letter. The settlement was for $800. I have to admit that when I saw it I felt it was too good to be true, however it was an offer I couldn't refuse. I've showed the letter to other people and it is clearly obvious to them also that the offer letter was for the entire account.

What would be my next step from here?

[aaron]

That is "too good to be true", but you may nonetheless be able to hold them to the deal. Laws are different in each state, and you have declined repeated invitations to identify where this occurred, so you will have to investigate the contract laws of your state.

You have the option of instructing the collection agency not to contact you, and seeing if they try to file a lawsuit against you. If they do file suit, you can use the letter and proof of payment as a defense - do not lose the letter.

[jmayer29]

Sorry I forgot to mention the state. It's California

[jmayer29]

To clarify...

I live in California, I went to school in North Dakota.

Anyone?

[aaron]

California law has been summarized as follows:

In Donovan, our high court explained that California does not follow the “traditional rule” recited in the first Restatement of Contracts, section 503, to the effect that “unilateral mistake did not render a contract voidable unless the other party knew of or caused the mistake.” (Donovan, supra, 26 Cal.4th at p. 280.) Instead, the Donovan court applied the more expansive rule of Section 153 of the Restatement Second of Contracts [26] allowing rescission due to unilateral mistake where enforcement of the contract would be unconscionable. (Donovan, supra, at p. 281.) In instances in which the other party was unaware of and did not cause the mistake, the party claiming unilateral mistake must show that “(1) the … mistake [was one] regarding a basic assumption upon which the [party claiming mistake] made the contract; (2) the mistake has a material effect upon the agreed exchange of performances that is adverse to the [party claiming mistake]; (3) the [party claiming mistake] does not bear the risk of the mistake; and (4) the effect of the mistake is such that enforcement of the contract would be unconscionable.” (Donovan, supra, at p. 282.) As to the third factor, both the Restatement Second of Contracts [27] and Civil Code section 1577 [28] note that the mistaken party's “neglect of legal duty” will bar relief; however, ordinary negligence does not constitute such “neglect of legal duty” that will preclude rescission. (Donovan, supra, at p. 283; see also M. F. Kemper Const. Co. v. City of L. A. (1951) 37 Cal.2d 696, 702 [235 P.2d 7].)
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26. “Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in [section] 154, and [¶] (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or [¶] (b) the other party had reason to know of the mistake or his fault caused the mistake.” (Rest.2d Contracts, § 153.)

27. “A mistaken party's fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation … , unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.” (Rest.2d Contracts, § 157.)

28. “Mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in: [¶] 1. An unconscious ignorance or forgetfulness of a fact past or present, material to the contract; or, [¶] 2. Belief in the present existence of a thing material to the contract, which does not exist, or in the past existence of such a thing, which has not existed.” (Civ. Code, § 1577.)