Legal Question in Business Law in New York

Contract Dispute

I am an independent hauler for a newspaper. The original contract signed stated I would be reimbursed at a rate of $37.69 per delivery trip for delivery of the newspaper. I was being reimbursed for 8 delivery trips as my weekly reimbursement rate was $301.50. In July I received a letter stating the following: After revaluating your run, we have determined that as of July 22 you will now be reimbursed at a rate of $44.42 per delivery trip for delivery of the newspaper.My weekly reimbursement rate should have been $355.36 but I only received 311.50. When this was questioned, and I asked for arearrs the company stated that I received that letter in error as it was based upon 7 delivery trips and not 8 and that the correct reimbursement rate should be $38.94 which would equal 311.50 weekly for 8 delivery trips. The company now wants me to sign a new contract showing $38.94 per delivery trip not the $44.42 as stated in the letter. They stated they are having all contractors sign new contracts and that it has nothing to do with me questioning them. Am I entitled to the $44.42 as stated in the letter (and the arrears) even though they stated it was incorrect and I never received anything from them stating it was a mistake?


Asked on 11/15/04, 8:31 pm

1 Answer from Attorneys
Peter Papagianakis Business Law Firm LLC

Re: Contract Dispute

Although additional facts are necessary to fully understand the issue, it seems that there are two fundamental contractual issues that might work against your claim.

First, as a general rule, a unilateral mistake (i.e., a mistake by only one party to the contract) works against the party that made the mistake. Thus, the general rule would favor your position that you were entitled to the higher rate from the time you received the letter.

One exception to the general rule, however, which favors the company, is that the unilateral mistake is not enforceable if the other party to the contract (i.e., you) "knew or had reason to know that the company was making a mistake." The company will argue that, because you were under contract (which is enforceable) at a lower rate, you should have known that the company made a mistake in the letter (which referred to the increased weekly rate). Whether you or the company would win on that issue is a fact-finder's decision.

The other argument that the company will likely pose is that you did not give any additional or separate consideration (i.e., a thing of value) in exchange for the increased rate. The general rule of consideration for contracts is that if you are under a pre-existing duty (i.e., under the original contract) to perform services in exchange for an agreed upon amount, then in order for you to be entitled to an amount in excess of the amount you agreed to in the original contract, you have to give some additional or separate consideration (i.e., thing of value) to the other party.

One issue that might be worth looking into (and which was not addressed in your facts) is (i) whether the company has the right to terminate the original contract at-will and (ii) even if it does have such unilateral termination right, did the company deliver the termination notice in accordance with the provisions of the original contract.

Peter Papagianakis

Business Law Firm LLC

[email protected]

(917) 478-0570

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Answered on 11/17/04, 8:25 pm


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