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Can I Be Sued for Breach of Contract if I Suspect Illegal Activity

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  • 08-13-2009, 03:22 PM
    giana83
    Can I Be Sued for Breach of Contract if I Suspect Illegal Activity
    My question involves independent contractors in the state of: AZ

    For the past 2 months, I have been freelancing an online radio station, making website updates and finding possible participants for their compilations.

    Basically, I send a generic form letter expressing interest in artists using various music sites and then schedule a call with interested parties and the station's "Music Director." Artist pay to be included on the compilation. While immoral, I figured most people would be smart enough not to respond.

    Two weeks ago, one of the recipients of this generic email responded to me, stating that they had been scammed a year ago by the station. They payed the requested fee and did not receive a spot on the compilation and did not get their money back when requested. They tried to contact her numerous times and were unsuccessful.

    I immediately forwarded this email to my contact at the station and asked for clarification. I was told it was a misunderstanding and nothing more. I responded that I needed clarification as I did not want to involve myself in illegal activity. I told her that I would not be doing any more work until this matter was clarified.

    Ten days later, she finally explains what happened and it's total B.S. She says that this artist was offered to be reimbursed, but the artist says this did not happen.

    Long story short, I gave my 10 business days notice (as specified in my contract) and said that I would update the website but would not provide any more leads during this period.

    She is now threatening to sue me for breach of contract. The contract specifies Tuscon, AZ as the place of law, so I would be required to fly from NY in order to defend myself.

    As a freelancer, I've always been under the impression that if illegal activities are involved (such as scamming someone out of $195) a contract would be null and void. My question is does she really have any ground to sue me for breach of contract? If I thought what she was doing was illegal, don't I have a right terminate our relationship without repercussion?
  • 08-16-2009, 06:36 PM
    Mr. Knowitall
    Re: Can I Be Sued for Breach of Contract if I Suspect Illegal Activity
    If you choose to breach your contract based upon speculation that they may have breached an entirely separate contract with an entirely separate person, more than a year ago, you're not offering up much of a defense to a breach of contract lawsuit.

    You don't know what happened.
  • 08-17-2009, 03:21 PM
    giana83
    Re: Can I Be Sued for Breach of Contract if I Suspect Illegal Activity
    Okay. On that note, lets say I finish out what remains of my contract and provide more leads for her. If she decides to scam another person, could I be held legally responsible for my part, since a prior alleged victim had alerted me to her alleged scam tactics?
  • 08-17-2009, 05:34 PM
    Mr. Knowitall
    Re: Can I Be Sued for Breach of Contract if I Suspect Illegal Activity
    You're only involved to the sense that you interject yourself between your client and their customer. Why isn't this process automated?
  • 08-17-2009, 10:50 PM
    KeyWestDan
    Re: Can I Be Sued for Breach of Contract if I Suspect Illegal Activity
    If the contract allows termination with a 10 day notice, which is what you said in your post, how then did you breach the contract?

    Assuming you did breach this agreement, what possible damages could there be? You find them advertisers that pay $195 each, less your commisison. Big deal contract there.

    Apparently you are not even in the same state, so how does she think she is going to sue you? It is not nearly enough for federal court and no state court would have any personal jurisdiction.

    No contract can force you to take part in illegal conduct. There are contracts that are illegal on their face and contracts that can become illegal due to fraud or other actions on part of a party. No contract can force you to take part in any fraud and if they can't fully explain this situation, I too would not want to risk my reputation possibly helping some business ripe off customers I found for them.

    Although AZ is the choice of law state, it does not give the court any jurisdiction over you. If you decided to show up there, then the court could claim personal jurisdiction.

    If she does sue, file an aswer saying that you do not live in AZ and never have and the court has no personal jurisdiction over you. I would also argue the contract was made fraudulent by the actions of the radio station and is thus unenforceable in any court.

    To be safe you'll want to research what grounds AZ courts use for long arm jurisdiction. You will also want to see if the winning party in a breach of contract case gets attorney fee awards. In many states each party pays their own attorney, and if that is the case, her attorney fees are going to be more than any award she is likely to get, assuming she could win.

    You might also want to point out to her that if she sues, she opens herself and the business to discovery and you will be able to find out every detail of their operations and find out if they have scammed anyone else. If you can show a pattern of fraud, she will go down in flames. I would also mention the bad publicity in their local market and nationally that would flow from such a case.

    Worse case scenario, you will have to hire an attorney in AZ to represent you. That would be cheaper than flying there for every little thing. Some courts will also let you appear by telephone. However I seriously think it will never get that far.
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