Legal Question in Business Law in New York

Right to collect on a contract sold to another party

I owned a business, and contracted with ABC corp. (changed the name for obvious reason)to buy equipment for which I gave $20K down payment (the contract did not include delivery date or penalty for late delivery). After 8 months I sell the stocks of the company to my employee. I also sell the original contract to the employee for $1 (which goods have not yet been delivered). He, in exchange signs a promissory note to repay me the 20K on monthly installments. The promissory note says that I should not be held responsible for anything that happens afterwards, and that the note is due in full if ex-employee defaults on it. After two months he decides to cancel the order (not in writing) because the goods have not arrived yet, and tells me that he will not send me money anymore because he never received the goods. ABC corp. is willing to return the deposit to ex-employee (minus architect and other fees) if ex-employee sends ABC corp. a cancellation of the order notice, however, ex-employee refuses to do so saying that it is my responsibility to collect the money from ABC corp.

What rigthts do I have at this point? Who should I sue to recover the money?

Thanks and Regards.


Asked on 1/28/02, 12:07 pm

1 Answer from Attorneys
Kenneth J. Ashman Ashman Law Offices, LLC

Re: Right to collect on a contract sold to another party

Obviously, it is important (read: critical) to review the promissory note before anyone can give any realistic appraisal of your rights. Nonetheless, based upon what you have written, it seems as though you have a claim against your ex-employee for the amount due on the note. I would probably warn him that you intend on filing suit unless payment is made, and, if no payment is made, then file suit against him for the amount due on the note.

In this regard, I note that NY has a special procedure for claims due on promissory notes. It is filing a "summary judgment in lieu of a complaint." In this way, you serve summary judgment papers along with a summons rather than a complaint, thereby accelerating the lawsuit considerably.

-- Kenneth J. Ashman; Ashman Law Offices, LLC; 156 W. 56th Street, Suite 1902, New York, NY 10019; [email protected]

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Answered on 1/31/02, 1:31 pm


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