Legal Question in Business Law in California

Re: Contract Dispute

First -- you say it isn't a franchise, but it sure sounds like one to me. Calling a goat a sheep doesn't make it one. However, this is probably an unimportant technicality.

Here's my analysis. You have a contract with RAC and a situation arose that (in your opinion) wasn't addressed by the contract. You proposed an amendment to the contract. RAC didn't reply in writing, but for one year performed as though they were accepting the proposed amendment. Now, they are attempting to un-do that past performance.

First issue is what does the contract say about amendment procedure? Must amandments be in writing and signed by both parties? If so, you probably haven't effectively amended it, and RAC perhaps can deny you delivery charge reimbursements in the future.

However, as to those already reimbursed, I believe the principle of waiver woukd prevent their recouping allowances or reimbursements already made.

Further, there is some possibility that a judge might find that the contract itself had been successfully modified as a result of the one-year waiver of the "in writing" requirement for contract modifications.

If the contract doesn't require a writing for modifications and is truly silent on the matter of these delivery allowances, you have a fairly strong argument that the parties' full year of performance under the reimbursement principle effectively wrote that provision into the contract.

I think you have a better than 50% chance of keeping the reimbursements already made in small claims court, and maybe a 25% chance (depends on whether you have a written-modifications-only clause) of keeping the reimbursement provision.

I think you will incur a significant risk of damaging your relationship with RAC if you sue them. What happens if they become very upset over the suit? Can they dump you? If that happened, could you sign up with someone else?

As for presentation of your case, get a self-help law book on small-claims procedures.

Re: Contract Dispute

If this is a small claims matter (less than $5,000) you should carefully consider whether you may win the battle but lose the war. If you don't have a franchise can RAC terminate the contract any time soon? Do you want to take the chance?

I suggest you write to the highest official you know at RAC and give the facts clearly and without hostility. Ask if they will consider your point of view or resolve the disagreement by mediation. If not, do you want to pursue this even if you have a legal claim?