Legal Question in Business Law in California

Contract Dispute

I sold my business equipment to an individual and his business. He paidd me 50% $7500 up front and promised the other 50% ''in a week''.

I made him sign a written agreement/contract that he did receive all the equipment of the business and that he was to pay the remaining sum to me by specified date. I even had this agrrement notarized by a public notary and gave him the copy.

Now its more than 2 months later and he will NOT pay us a dime back for two reasons which he has detailed verbally. One, he does not have the $$$ which is an excuse. Two, he claims that hye ''overpaid'' for the items. He had plenty of chances to examine the equipment AND we also put an ''AS IS'' clause clear in the written agreement.

What are the next steps that I need to take as he is not retuening any of my phone calls?? $7500 sounds like a little more than small claims court. Hw do I write a letter and send to him certified mail to which if I get no response, I take him to court? What do I need to put in this letter? Can I sue him for daily interst plus court costs or is the $7500 is the actual damages??? Please advise. Thank you very much.


Asked on 1/09/07, 6:40 pm

3 Answers from Attorneys
Edward Hoffman Law Offices of Edward A. Hoffman

Re: Contract Dispute

$7,500 is the upper limit for small claims cases in California. You do not need to write a demand letter first, but it is a good idea to send one in order to make a record. If you win, your judgment will include interest from the day the payment was due plus court costs. These items do not count against the $7,500 small claims limitation and may result in a total judgment above that amount.

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Answered on 1/09/07, 6:52 pm
Carl Starrett Law Offices of Carl H. Starrett II

Re: Contract Dispute

I concur with my colleague's comments. A demand letter is not required, but it is a good idea. The demand letter doesn't need to be very elaborate, just state the fact and given him a firm deadline to respond.

Interest doesn't count toward the $7500 small claims limit. Most cost have a free small claims advisor office where you can get free legal advice regarding your matter.

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Answered on 1/09/07, 7:07 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Contract Dispute

One interesting matter you didn't address is whether you still have physical possession of the equipment you sold, or if the buyer has it.

Before parting with possession, you should obtain a security agreement stating that the equipment is collateral for the balance due, then file a Form UCC-1 with the Secretary of State. That makes you a secured creditor, and your claim would be at the top of the list in the event of a bankruptcy by the buyer.

You probably have a vendor's lien on the equipment, and even without a formal security interest you should be able to get the equipment returned to you; you would then be required to return the $7,500 payment less any damages and costs you incurred.

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Answered on 1/09/07, 7:42 pm


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