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  1. #1
    Join Date
    Feb 2014
    Posts
    2

    Exclamation Does a Debt Collector Have to Show Proof of Losses to Collect Liquidated Damages

    My question involves collection proceedings in the State of: New York


    I signed a contract with a company called College pro painters who hire students to manage painting companies. While going through the contract i was mislead about some of the details around the wording and after doing some research i realized there was a chance that i could a lot loose a lot more money than i could make. Less than a week after i signed the contract I told them I was quitting.

    The contract says says "If termination occurs during the period up to but not including the first training session, damages of $750.00, which the parties acknowledge is a genuine pre-estimate of the damages College Pro will suffer as a result of the Franchisee’s repudiation of the Franchise Agreement"

    When I asked for proof or records of the damages they incurred during the few days I was registered with them they lead me in circles saying that they don't need proof because it's an estimate. Then I'd say so there is no proof? and they'd say they personally don't know and I should talk to so and so. I can't get a straight answer from anyone whether there is proof of damages. They wont say no or yes.

    Are they required to show proof according to what the contract says? If I refuse to pay until they show proof and it goes to court would i have a good chance?

    I've attached what the contract says exactly (middle section)

  2. #2
    Join Date
    Jun 2013
    Posts
    551

    Default Re: When a Contract Say "Pay Damages Of" but They Won't Show You Any Proof

    Did you sign the contract?

    In 2 a.) you acknowledge $750 is a genuine estimate of their damages. If you didn't agree that that was a reasonable estimate then you should have brought it up before you signed.

  3. #3
    Join Date
    Sep 2013
    Posts
    833

    Default Re: When a Contract Say "Pay Damages Of" but They Won't Show You Any Proof

    That is a liquidated damages provision. They are trying to paper around the fact that liquidated damages need to be reasonably related to something difficult to really determine. I suppose they are trying to estop you from claiming they are not reasonable if there ever is a lawsuit. I do not know if that would work, but, it is certainly something they would claim. The generic elements of liquidated damages are on Wikipedia:
    • First, the amount of the damages identified must roughly approximate the damages likely to fall upon the party seeking the benefit of the term.
    • Second, the damages must be sufficiently uncertain at the time the contract is made that such a clause will likely save both parties the future difficulty of estimating damages.

  4. #4
    Join Date
    Feb 2014
    Posts
    2

    Default Re: When a Contract Say "Pay Damages Of" but They Won't Show You Any Proof

    Thanks for the quick reply.

    Yes me and my parent both signed the contract (I was 17 on the day of). And I thought that would be a reasonable estimate once they had invested materials and time training me. Since I quit mere days after (also partially due to the fact my family had decided to move away), I feel they haven't incurred any damages and they refuse to show evidence of such.

    - - - Updated - - -

    So even though I've already signed I can say I don't feel that wasn't reasonable in court?

  5. #5
    Join Date
    Sep 2013
    Posts
    833

    Default Re: When a Contract Say "Pay Damages Of" but They Won't Show You Any Proof

    The point of liquidated damages is to prevent litigation over the amount of damages. I think it would cost you a lot more in court to even have a chance to challenge the provision than it would to just accept and pay it. The contract also probably has a loser pays attorney fees provision and I think it unlikely you would win with this amount being claimed as damages. The reasonableness gets to the anticipation of potential damages and not what they actually worked out to be.

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