Legal Question in Business Law in New Jersey

A few months back I hired a collection agency to collect a debt on my behalf. According to the agreement they would purchase my debt for $1.80 or 0.01% of the debt as an initial payment, plus two-thirds of the proceeds collected on the debt. I've gone through my files and bank records and they never made the initial payment. Have they violated the agreement and if they have what should I do next. I have posted the section of the agreement I'm referring to below.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree as follows:

1. Sale and Purchase. For the Purchase Price (as hereinafter defined), on the terms and conditions set forth in this Agreement, Seller agrees to sell, convey, and assign to Purchaser, and Purchaser agrees to purchase and accept from Seller, the Debt and all of the right, title and interest of Seller in, to and under the Debt Documents (collectively, the "Purchased Interests").

2. Effective Date; Purchase Price; Vesting of Title. The "Effective Date" of this Agreement shall be the date an original of this Agreement (or original counterparts of this Agreement) is executed by both Seller and Purchaser. The purchase price to be paid by Purchaser to Seller for the Purchased Interests is $_1.80______, which equals ___0.01%_of the face value of the Debt (the �Initial Payment�), as well as ________two-thirds______ of the proceeds collected on the Debt, less the Initial Payment and all costs, expenses, and fees incurred in collecting the Debt (the �Final Payment�) �(collectively "Purchase Price"). However, in the event, the Debt is collected via the use of any attorney or litigation, an additional 15% will be deducted from the proceeds collected on the Debt. To the extent the terms set forth herein this Section Two are ambiguous, the examples below shall govern.

The Initial Payment shall be due and payable by Purchaser upon the execution of this Agreement by the Parties. The Final Payment shall be due and payable by Purchaser after a period of ______two_______ years from the Effective Date. Title of the Debt shall immediately vest in the Purchaser upon the Purchaser making the Initial Payment to the Seller. However, upon 30 days written notice by Seller to Purchaser, Seller may repurchase the Debt, provided Seller pays Purchaser the Initial Payment, plus all costs, fees and expenses that Purchaser has incurred in attempting to collect the Debt. Notwithstanding anything herein to the contrary, Seller shall not be permitted to repurchase the Debt if Purchaser has been successful at collecting the Debt or any portion of it. In the event Purchaser fails to timely make the Final Payment to Seller, title in the Debt shall once again become vested in Seller; however, this shall be Seller�s sole and exclusive remedy for Purchaser�s failure to pay the Purchase Price or for any other action or thing relating to and/or arising out of this Agreement or the Debt or collection thereon.


Asked on 12/11/12, 8:49 am

1 Answer from Attorneys
Barry Gartenberg Barry F. Gartenberg LLC

I represent clients with respect to a wide variety of contract disputes and I am confident that I can provide valuable legal advice and opinion with regard to your question. However, to paraphrase H.L. Mencken, � For every question, there is an answer that is simple, neat and wrong. It would be imprudent to attempt to provide a meaningful response based only upon the posted information. Even simple facts you have not shared can completely change the answer. I would be pleased to discuss the matter further and invite you to call me... 973-921-0600.

Kindly note and remember that my response is merely a general comment on the law related to your question, and NOT legal advice or opinion. Also, your question and my response does NOT create an attorney-client relationship between us. You cannot rely upon what I have written, because I do not have all of the information that I need to advise you or render an opinion. For me to give you legal advice or opinion, you would need to hire me to be your lawyer, and then we would need to discuss this in detail and go over the documents.

Please visit my website! www.bgartenberg.com or call me if you�d like to learn more about me or my practice. Thank you.

IRS CIRCULAR 230 DISCLOSURE: As required by U.S. Treasury Regulations governing tax practice, you are hereby advised that written advice contained herein (if any) was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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Answered on 12/11/12, 8:59 am


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