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  1. #1
    Join Date
    Jul 2006
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    4

    Default Verbal Contract and Breach of Contract

    In October of last year, I've decided to open a Water & Smoke shop in Southern California. The water store requires a commercial filtration system to be installed along with other plumbing work. My friend, who I've known for a good 6-7 years now, runs a water sytems and supplies company suggested that he would do it for me at a much lower cost than what I would have to pay if I were to purchase the filtration system at retail price through the company that he worked with. His price was $5,000 +/- a few dollars vs. $15,000, a substantial saving for me.

    At the time of payment for the system, I gave him $5,000 and he gave me a written receipt for it dated October 28, 2005 along with a verbal promise that the machine can be completed in two (2) weeks. My lease commenced on November 1, 2005. We began construction of the project and it took roughly 5 weeks for the completion of the interior improvements. During this time, the filtration system could not be installed because the tile work was not completed. In December 2005, after the completion of the construction phase, I contacted him to get system complete but without success. He kept promising that he will "wrap it up by this weekend." Throughout these months (December til now), I told him that he can drag out the project for as long as he wishes under the condition that he makes the lease payment. Unfortunately, I did not document any of our phone conversations as I trusted my friend.

    In May of this year, I got fed up and wrote him an email to cancel the purchase of the system through him and ask for our money back. However, he gave us a written timetable as to when certain components of the system will be installed and it looked reasonable; the work was going to be completed within a week time. However, it is now July, and our system is still nonfunctional. The system yields bad product, the filtered water taste is full of chlorine.

    Two (2) days ago, I wrote him an ultimatum, so to speak. I gave him two (2) days to contact us and get the system completed by 5:00 p.m. July 5, 2006 as it has been eight (8) months that I have paid lease; or I will seek legal recourse. The amount of money I spent paying the lease and other expenses for the store front has exceeded (way exceeded) the amount I would have paid for a brand new system (10x better than the current incomplete makeshift system) and fully installed.

    Can verbal contract be upheld in the court of California? Can I use email correspondence as part of the evidence? What about the undocumented phone conversations? If I have some basis to sue him, what types of finanical compensation can I ask the court to grant me? Please advise.

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
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    98,846

    Default Re: Verbal Contract and Breach of Contract

    Does your friend have any money to pay off a judgment?

    Is the work he performed salvageable - that is, can another company come in and repair the installation, or does everything have to be removed and replaced?

    You should keep in mind that you have a duty to mitigate your damages, so sitting on your hands and blaming your continued losses on your friend probably won't get you very far in court.

  3. #3
    Join Date
    Jul 2006
    Posts
    4

    Default Re: Verbal Contract and Breach of Contract

    <i>Does your friend have any money to pay off a judgment?</i>

    He may or may not have the money to pay off the full judgment should there be one. I am not aware about his financial status. He is a president/CEO of a company, so I imagine he would have something.

    <i>Is the work he performed salvageable - that is, can another company come in and repair the installation, or does everything have to be removed and replaced? </i>

    In March, we have asked another company to come in and look at the system. They said that they would have to disasemble the incomplete system and rebuild from scratch but it would cost us $19,000; the dismantling incurs additional cost of labor. I have also gone to the company that he worked with to see if they can help us installing the remaining components that are missing. But they could not give us a quote because the way he had assemble the system is not conventional. The other person in the company that can assemble the system has been on vacation for a while now.

    Water store building in California is not very common. There are only two (2) that I've known of and that's his company and the other company that was going to charge us $19k.

    To make matter worse, he has not been returning my phone calls nor answering my emails. I've come to his office but he was out in the field. I am still trying to contact him because it is in my best interest to get my store front up and going.

    Please advise.

  4. #4
    Join Date
    Jun 2006
    Location
    Practicing in Los Angeles, California
    Posts
    411

    Default Re: Verbal Contract and Breach of Contract

    Quote Quoting Tiffa
    <i>Does your friend have any money to pay off a judgment?</i>

    He may or may not have the money to pay off the full judgment should there be one. I am not aware about his financial status. He is a president/CEO of a company, so I imagine he would have something.

    <i>Is the work he performed salvageable - that is, can another company come in and repair the installation, or does everything have to be removed and replaced? </i>

    In March, we have asked another company to come in and look at the system. They said that they would have to disasemble the incomplete system and rebuild from scratch but it would cost us $19,000; the dismantling incurs additional cost of labor. I have also gone to the company that he worked with to see if they can help us installing the remaining components that are missing. But they could not give us a quote because the way he had assemble the system is not conventional. The other person in the company that can assemble the system has been on vacation for a while now.

    Water store building in California is not very common. There are only two (2) that I've known of and that's his company and the other company that was going to charge us $19k.

    To make matter worse, he has not been returning my phone calls nor answering my emails. I've come to his office but he was out in the field. I am still trying to contact him because it is in my best interest to get my store front up and going.

    Please advise.

    My response:

    You MUST mitigate your damages. Obtain a professional report regarding WHY the current system doesn't work; i.e., why the current system must be torn down, and a new system installed. I realize how easy it rolls off the tongue to say "pay the $19,000.00", but that is exactly what you have to do in order to get your judgment for damages. I know it's difficult, but you must remember that courts rely heavily on evidence of "mitigation". You cannot merely wait, wait and wait more, while you lose income and profits.

    Then, you sue the original installer for the difference in what you were originally estimated for the work and materials, verus what it costs you today, plus all of your lost income.

    But, you must act immediately rather than wait for this matter to wind its way through the court system.

    IAAL

  5. #5
    Join Date
    Jul 2006
    Posts
    4

    Default Re: Verbal Contract and Breach of Contract

    Thank you all for your advice and input.

    I was able to contact the orginal installer yesterday and he said that for sure he would get everything done by tomorrow. If I were to allow him to complete the system, can I still go after him for the financial loss from lease payment?

  6. #6
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Verbal Contract and Breach of Contract

    Can you go after him? Yes. It's easy to file a lawsuit. Can you recover the money? For reasons previously discussed, that's a lot harder to say.

  7. #7
    Join Date
    Jul 2006
    Posts
    4

    Thumbs up Re: Verbal Contract and Breach of Contract

    Thanks again for your input. By now it has been etched into me that without evidence of loss mitigation, it is more challenging to seek financial compensation.

    Though this person has been agonizingly unprofessional, he had been a family friend for several years. It is difficult to severe ties, so I may not bring him to court should he complete the system by tomorrow. I am, however, thankful to have encountered these types of issue on my very first business venture. It has been a very valuable learning experience and, of course, it brought me to this great forum.

    Thank you all for your knowledge and time. As I've mentioned this is a great forum and I've learned so much more about the other matters that I may /may not encounter. Please keep up the wonderful work!

    One last question pertaining to this issue (for future reference's sake - should something ever posses me to enter such type of business deal with friend(s) again): What is the statute of limitations on issues as this?

    I have a few more questions, however, they pertain to med malpractice law, so I will find the appropriate forum to post.

    Again, thank you everyone ... merci bien tous le monde ... grazie tuttie ... danke jeder ... arigato gozaimashita mina!!

    -tiffa

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