New York Debt Collection: Basics of a Valid Contract

Related image A New York Debt Collection case is really a breach of contract case. You and your customer agreed to work together in some capacity and now, you are unpaid. Whether the agreement is in writing or not. You need to make sure that you have the basics of a valid contract in order to win your New York Debt Collection case.

Whether the agreement must be in writing varies state by state. And, even if you do not have a contract, you can pursue the non-paying client on another theory. Regardless, in order to be successful, you must make sure that all of the necessary elements of a a valid contract have been met.

Losing more than just your profit:

Not having a valid contract can cause you more than just your profit. Take for example our client who had a signed contract with their customer. Although the parties agreed upon a price and the contract was signed, they were missing one of the important elements of the agreement.

Case Study:

Our client imports and sells rice. The sales are in mass quantities, always in writing. The success of the client’s business depends upon being able to sell at a high price and buy at a low price. The higher the price at sale, the lower rice importer can buy, the more profit in client’s pocket.

Because of constant price fluctuations, the client may sell on a high but wait a while before purchasing the rice, waiting for the price to drop to increase their profit margin.

In this case, the client made a deal with the buyer.  The buyer, agreed to buy at a high, the seller agreed to sell. The client waited to buy, just before time for delivery in hopes that the price dropped more so they could maximize profit.

The importer client approached the customer just before the set time to deliver the product to confirm that delivery would be made as agreed. (The seller was just ready to pull the trigger and buy to satisfy the order).  When the importer notified the client that he was ready to ship and meet the terms of their agreement, and, the customer cancelled the contract.

Not only had the seller waited for the price to drop just before delivery, but the buyer too had been tracking the market. Since the buyer knew that he had bought high and could buy the goods now for a much lower price, he cancelled the order and bought from another rice importer.

The seller importer now wishes to pursue the customer for the purchase prices in a New York Debt Collection case to sue for the profit they would have gained on the deal. Only, there is one problem…

The agreement is invalid:

Yes, it’s true, both Seller and Buyer signed the contract.  The buyer agreed to buy and the seller agreed to sell.  But, the seller never “performed”. That is, the seller never bought the rice that they were supposed to in order to fulfill their part of the contract.

Now, the seller, wants to sue to enforce their rights to get paid. The problem is that although the buyer did agree to buy, the seller never performed their part. They are missing one of the necessary elements to have a binding contract.

What’s missing?

In order to have a binding contract, you need to have four elements, the basics of a valid contract.

  1. Offer

The seller (of goods or services) needs to make an offer to sell specific goods or services at a specific price.

  1. Acceptance

The client or customer must agree to buy what the seller is selling at the offered price or counter at another price (which would be agreed to by seller).

  1. Consideration

There needs to be a promise to do something. For purposes of New York Debt Collection, the buyer would promise to pay an agreed amount.

  1. Performance

The seller would perform. The service provider provides the services, the seller of goods acquires the item to sell and is in a position to complete the transaction and deliver.

In our client’s case above, since they didn’t buy the rice to resell, they never performed.  As such, they had not been “damaged”.

If you provided services or sold and delivered goods to your New York client who agreed to pay but didn’t, you may have a claim. For a free consultation or to place a claim, contact FFGN by email, or call 212-686-0100 ext. 12.

For more information on preventing or collecting bad debt, please sign up for our weekly blog   ffgnesqs.com/blog or contact us. Comments and suggestions are always appreciated.

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