Legal Question in Business Law in California

Corp to corp contract terminated early

Our company has a contract with a consulting agency to provide a member of the company's consulting services for the length of one year--starting August '08--to another vendor (a corp-to-corp agreement). Our resource was let go of last week. We were initially told the resource was let go due to the vendor not being able to afford the resource any longer, but it turns out the resource was replaced for someone significantly cheaper.

There is a clause in our contract stating for termination: ''consulting corp for any reason for vendor request may terminate this agreement. Consultant may terminate this agreement at will.''

I know California is an at will state, but this is not a W2 scenario.

Please advise.


Asked on 2/13/09, 6:49 pm

2 Answers from Attorneys

Adam Telanoff Telanoff & Telanoff

Re: Corp to corp contract terminated early

There are not enough facts presented to clearly understand the issue. That being said, if the contract allows for early termination, as long as any restrictions on termination were complied with, the contract would be terminated.

Feel free to contact me with any follow-up questions.

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Answered on 2/13/09, 7:30 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Corp to corp contract terminated early

I too have difficulty following the facts. The problem seems to be that the persons and entities are ambiguously labeled in your discussion. There seem to be, in order of appearance, your company, a consulting agency, a member of some company (what exactly is a "member" of a company here - an employee? a member of the board of directors?), a vendor, a resource, someone significantly cheaper, a consulting corp, and finally, a consultant.

This is potentially ten separate persons or entities. Clearly, more than one of the names must apply to the same party, but no one can tell which.

In general, at-will contracts are not limited to W-2 employment situations nor are they unusual at all. For example, I have a contract with my propane supplier to keep my tank full. I just got a delivery, without placing an order. However, if I found that its competitor were selling gas for 50c less a gallon, I'd call up and cancel the contract. Similarly, if my propane supplier decided to eliminate the route that goes out my way, it could, by giving notice, cut me off without liability.

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Answered on 2/13/09, 8:51 pm


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