Contract dispute - Need a gut check
October 14, 2016 3:29 PM   Subscribe

Hoping for a gut check from my fellow legal practitioners on the steps forward on a disputing I am having with a contractor in DC/VA. IAAL. YANML. Prior to signing a contract for installation of a product a few years ago, I inquired with the salesperson, in writing, as to how much a [service] would cost if [situation] occurs. Salesperson responds by writing stating it would not be more than $X. Relying on this, I sign the contract. The contract does not contain this specific price quote, but it also does not have a merger/integration clause. Two years later, [situation] has occurred. I require the stated service. Company is quoting $5X for service and says the original e-mail by the salesperson cannot be honored because salesperson does not work with the company any longer. I have a general idea of how to proceed with this, but I want to see if there's anything I'm missing and how my fellow practitioners would proceed.

Details are as above. Contract was signed a few years ago. Installation of product successfully completed a year ago. Company is domiciled in VA, registered license in DC and regularly does business in DC. Work was done in DC. I'm an attorney, but not the kind of attorney that does civil cases, so I'm relying on memories from law school here.

The situation has occurred such that I need the company to come and perform the requested service as soon as possible, so that I can bring in another company to rectify the situation. Situation will slowly worsen and potentially result in more damage over time, although I am doing everything I can to mitigate this.

I have sent an ultimatum to the company asking that they honor the original quoted price, otherwise I will pursue legal remedies and testify to any other potential customers of the company of my poor experience. What are my steps forward if they balk?

Here's what I'm thinking:
1) Find another company to perform service.
2) Sue company in small claims court for damages of amount between $X and actual paid price for service.
- Theory: No integration clause in final contract, therefore signed the contract on reliance of $X price, and entitled to damages.

- Does the theory have basis? I seem to recall from Contracts that my case is better because of a lack of an integration clause - certainly there's reliance here, maybe an argument of fraudulent inducement?
- Do I have to get another company to resolve the situation before I can sue for damages? Or can I just move forward with the case as soon as they say no we aren't going to perform the service?
- Any other basis for damages? E.g. increased damages as relating to worsening situation?
- Do I sue in DC or VA?
- Anything else?
posted by Karaage to Law & Government (10 answers total) 1 user marked this as a favorite
I am not a lawyer, however I think the company's claim that "the original e-mail by the salesperson cannot be honored because salesperson does not work with the company any longer" is a) hilarious, and b) if that's the defense they're going to run with, I am sure there is plenty of case law saying Dave's not here is no defense.
posted by zippy at 3:44 PM on October 14, 2016 [4 favorites]

This is a classic breach of contract in my view. The price cap is a term of the contract you negotiated, whether or not it appears in the unintegrated writing, and the refusal to honor it is breach. (Fraudulent inducement, btw, is a basis to rescind the contract, not for breach.) Usually the measure of damages from breach is what is required to make you whole, which is any amount charged above the cap. But normally not consequential damages.

I think you can tell the company you had a deal, and if they breach by charging you more than the cap, you will sue to recover your damages. I also think you can bring suit where you are, as that seems to be where the contract was signed and breach will occur.

I'd finally point out what I'm sure you know -- smart lawyers don't represent themselves. Get someone you know to take this on for you. And next time, get the price cap written in.
posted by bearwife at 4:36 PM on October 14, 2016 [1 favorite]

> smart lawyers don't represent themselves.

I agree. The best answer for you is the same as for all others: don't rely on the opinions or ideas you find online. Find yourself a lawyer.

The fact that you are a lawyer yourself does not change that answer. it does mean that (1) you can be a good client, as you will be knowledgeable, and (2) you probably have the connections to find the right lawyer to advise you.
posted by yclipse at 4:55 PM on October 14, 2016

Response by poster: Thanks for the advice so far. The amount is definitely well within the small claims amount and I'll consider chatting with an attorney on this, but I think the amount in dispute is low enough that self representation makes more sense for the recovery to be meaningful.
posted by Karaage at 5:09 PM on October 14, 2016

So does VA enforce the parol evidence rule? Despite the lack of a merger clause, your efforts to admit evidence of the additional terms may be thwarted.

Also, you are a lawyer. You're not going to get any breaks from the tribunal by citing technicalities.

Having represented lawyers in the past, be assured you will have a difficult time with the fact finder be it a judge or jury.
posted by mygoditsbob at 5:34 PM on October 14, 2016

Response by poster: So does VA enforce the parol evidence rule? Despite the lack of a merger clause, your efforts to admit evidence of the additional terms may be thwarted.

Could you elaborate? VA and DC both have the parol evidence rule, but the rule is to prevent introduction of evidence of previous discussions to contradict terms in the written instrument; there's no contradiction here because no such clause existed in the signed document. If the rule is to be used to exclude additional terms, the court would have to find that the agreement is excludes outside terms, i.e. a merger clause, of which there is none.
posted by Karaage at 6:07 PM on October 14, 2016

Best answer: there's no contradiction here because no such clause existed in the signed document

Noooooot necessarily. We don't know if the [situation] could be treated as a sub-situation or variant of a situation addressed in the contract. E.g., contract says "all repairs will be done at $x per hour" (where that calculation gets you to 5x the quoted price in the extrinsic writing).

(I don't know what the rule is like in VA/DC and it does vary by state so I'll defer to someone actually in the VA/DC bar, but in NY, which is particularly hard-line on these matters, you would not be able to introduce any extrinsic evidence as to the terms without showing that the contract was ambiguous. Not having a merger clause would only mean that OP could try to prove a collateral agreement concerning repairs. That's not a slam-dunk.)

First, OP, you don't mention whether the contract has a choice-of-law clause. That would tell you what law applied. You should also check to make sure that there is not a mandatory arbitration clause in there.

Second, in order to show fraudulent inducement in connection with a contract, you would have to show that there was no intent to honor the term at the time the statement was made. A later change of mind would not qualify. Quite difficult to do outside some extremely shady scenarios.

Third, if there's any chance the damage could worsen in the near future, you need to get someone in to do the repairs now. Otherwise, you'll end up eating the cost of the additional damage because you didn't mitigate.
posted by praemunire at 6:40 PM on October 14, 2016 [2 favorites]

If you're at a reasonable total exposure ("within small claims amount") and you need the service (at $X or at $5X), why not self-help and have them do whatever they do, being very careful not to agree to any different terms than the existing contract. You get your service done, and when they bill you $5X, pay 'em $X. Let _them_ take _you_ to court, if they dare.

(Caution: they may report you to the bar or fuck with your Yelp rating or whatever.)
posted by spacewrench at 7:40 PM on October 14, 2016

Response by poster: @praemunrie: I cannot emphasize enough how barebones the signed proposal is, which is entirely around scope of installation work and that they would help with paperwork and permits and the specs of the system they were to install. No choice of law, no discussions of any repair work rates, no arbitration clause within the signed proposal.
posted by Karaage at 8:10 PM on October 14, 2016

Best answer: As this salesman is (allegedly) no longer at the company, I would direct a searching look at the evidence you have available for this additional term. The odds are good that the ex-salesman will manage to avoid being available to testify unless his testimony is in the company's favor. (As he is no longer with the company, it is not under any obligation to produce him. And, if he's moved out of state, the court may not have jurisdiction so that you can easily notice him as a third-party witness.) The records he left at the company may be minimal (and how much are you willing to spend on discovery, anyway?). So whatever writing you have now may be all you have to make your case. Will you be able to authenticate it? Is it thoroughly unambiguous in all its references? Are there any other communications you are aware of, or any other witnesses, that might in any way raise doubts about what the term meant and whether it was agreed? Did you have any communications with the company post-signing that might introduce ambiguity?

Also, consider costs. Hard to tell what the figures are here but make sure you're not in serious danger of paying out as much or more in legal costs as you could recover for the breach.
posted by praemunire at 9:37 PM on October 14, 2016 [1 favorite]

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