Legal Question in Business Law in California

Re: Holding a contract to ransom

Without knowing the nature of the contract, it is hard to give a helpful reply. There is a two phase analysis.

Your contract with A is not a contract. Your offer to him in the form of the writing was immediately rejected. Thus no acceptance, and no contract. It is also the law there is no contract where two parties do not mutually agree to the same important terms at the same time.

I assume A used the assignment to collect the contract from C. C had a right [I presume] to rely on your assignment, because you probably did not notify C immediately there was no assignment.

If these things are true, your only recourse is to A for fraud and breach of contract. You can still recover on the contract with C, but only if C dealt with A knowing A was not in contract with you.

NOTE: Please understand that the information provided in this reply is for informational purposes only and does not create an attorney-client relationship. It also may not be complete, and is designed for general information to parties under California law. Before you make any decision that might possibly have legal implications, you should consult with our office, or another qualified professional, so that thorough legal advice can be provided in a manner that relates to your specific circumstances. Thank you.

Reply Posted By:

Wayne V.R. Smith

Attorney at Law

P.O. Box 3219

Martinez CA 94553

(925) 228-5232

Re: Holding a contract to ransom

If C still wants to do business with B, why not just prepare another copy of the contract, and B and C sign it and carry on their business, leaving A on the sidelines? It sounds to me as though B and C are not in very close communication. On the other hand, a lot of useful facts are left out of the question, and others are ambiguously stated, such as what is meant by 'collected a contract' -- does this mean phsically picking up the paperwork, like a messenger, or does it mean 'received money due under the contract' or something else? Is A an assignee, a third party beneficiary, or just someone B retained to assist in carrying out B's responsibilities as B's agent?

I can probably be of assistance, but need more and clearer facts.

Re: Holding a contract to ransom

You indicate that you have a contract with Party A, whereby, you would pay him 10% of the value of the contract if he could obtain in for your company with another company. Sounds like a commission, to me.

If he has obtained the contract, you are entitled to it for only a 10% commission, and no more. What he is doing is called extortion.

I would need to review the contract, but you could agree to pay more, and then give him only the 10% contracted for. He would have a difficult time suing for the difference, because the new agreement would have been under duress and lacking any consideration.

Here again, I would need to review the documents to be more difinitive.