My question involves business law in the state of: Michigan A friend & I signed contracts & became consultants for Creative Memories. We were both "deactivated" by CM for not ordering/selling enough product. Contract reads: "In the event I fail to purchase $500 within a consecutive three-month period, this Agreement will terminate automatically without further notice, unless I participate in the reactivation option set forth in the manual." We read this as meaning if we didn't make the quota we were done. My friend tried to sell her extra stuff on ebay & they sent her a nasty cease & desist letter. The contract also says: "upon termination of this agreement I will cease all use of Creative Memories Intellectual Property and Confidential information and will cease holding Get Togethers, Workshops, and presentations otherwise displaying, offering for sale, or selling creative Memories products. If I offer for sale or sell creative memories products in violation of the foregoing sentence, Creative Memories will be entitled to recover from me $5,000 as liquidated damages without having to prove actual harm." CM is claiming we can't ever sell our stuff, not even at a yard sale. We can use it personally, donate it, or give it as a gift.
Can they legally charge that $5,000 without showing harm? If there is no expiration date on the contract how long is it valid? If my friend never actually sold anything, she just signed up to get the kit, could she go through a loop-hole because she never sold, so she can't cease? I know it's a stretch but I think this is crazy. Some of her product she actually bought @ full retail price before she became a consultant. Can they prevent her from selling that now, too?
Thanks in advance.