Legal Question in Civil Litigation in New York

We received an order from a company through a salesperson. We had been receiving orders for this company through the salesperson for over 18 months and all previous orders were invoiced and paid to our company. About six months ago, the salesperson had financial problems and told the company to disregard our invoices. The salesperson issued the customer his own invoices and the customer paid the salesperson because they are good friends. The customer is refusing to pay us and we know the salesperson does not have the money to reimburse us. Do we sue the customer for non-payment or go after the salesperson for fraud? There is over $12,000 in unpaid bills.


Asked on 10/22/09, 4:52 pm

1 Answer from Attorneys
Michael Markowitz Michael A. Markowitz, PC

You would sue the customer. I will explain why.

"When an agent acts on behalf of a disclosed principal, the agent will not be personally liable for breach of contract unless there is clear and explicit evidence of the agent's intention to be personally bound" (I. Kaszirer Diamonds, Ltd. v. Zohar Creations, Ltd., 146 A.D.2d 492, 494 [1989]).

In your fact pattern, the sales person is the agent. The customer (company) is the principal. You know the identity of the principal. I assume you issued the invoice to the principal - not the salesperson. Therefore, you would sue the principal. It would be up to the principal to sue the salesperson for return of its money.

Mike.

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Answered on 10/28/09, 8:31 am


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