Legal Question in Business Law in New Jersey

Mutual Release

I am a software developer with a 3 year agreement that has just ended with a reseller. They registered each software sale with my company via internet to obtain a registration code at a fixed fee per sale. I have just discovered that over the past 3 years, we failed to invoice the reseller each month for about 10% of sales registered, due to a glitch in our system. At end of business we signed a mutual release clause:

''Both parties agree to unconditionally release each other, and covenant not to sue or commence any administrative proceedings against each other, their officers, employees, predecessors, successors or assignees for any and all claims, liabilities, obligations, agreements, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, relating to any and all business conducted prior to the execution of this agreement.''

There is no fraud by them but they were obviously aware of the invoices, so does that clause prevent me from winning a suit against the reseller for non-invoiced sales? Thank you.


Asked on 6/20/02, 7:51 pm

2 Answers from Attorneys

Re: Mutual Release

I agree with Geoffrey, in that the release can easily be argued to cover your mistake, and preclude your recovery. However, there are equitable doctrines that would likely at least get you to court. This was a unilateral mistake on your part, and a contract or release requires a meetign of the minds. Here you clearly did not intend to release them for the 10%. IF you can find that they were aware of the mistake, I think you have a decent, though not good chance of getting your money.

So, #1, I ALWAYS use a minimalist approach... have you called them and pointed out the mistake? Maybe they will pay you w/o a lawyer. Step #2, is a letter from an atty, which MAY be enough, but not likely. The next question is how much money are we talking? The less $$ the more likely they will pay up to settle. Step #3, file suit.

Good luck.

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Answered on 7/16/02, 5:17 pm
Geoffrey G. Gussis, Esq. Riker, Danzig LLP

Re: Mutual Release

This release seems broad enough to cover your potential claim (covering "known and unknown" losses). There are certain legal doctrines that cover similar situations (mistake of fact, etc.) but they may not apply based on the release language. Your best move is to have an attorney send a formal letter explaining the situation and demanding that they pay. It all depends on the amount of money involved. It's not worth it to sue over a small amount but sending a letter is relatively inexpensive and often results in the desired compliance.

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Answered on 6/24/02, 5:32 pm


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