I have an oral agreement to perform duties in exchange for sharing in revenue. Over the past 5 months I have worked full time performing services and incurred expense in this arrangement, only to find the other party is dragging their feet on completing the contract. They want to change the terms we agreed on and are not willing to honor our initial agreement. They have received over $50,000 as a result of my efforts and are holding the money. I have gone 5 months without being reimbursed for the money owed and know they have received revenue from my efforts.
How strong of a case, and what options do I have? Should I continue to work through contract language or pull the plug and take legal action?
Well, sounds like you have an oral contract with a person who's not fulfilling their promises. You should consult an attorney so that the two of you can evaluate your case in more detail and come up with an action plan. The first consultation is typically free and an attorney may choose to take your case on contingency depending on its strength. Also, the two of you will discuss how to proceed, whether you try to informally resolve the case via negotiation or actually file a lawsuit.
My analysis is your situation is very unlikely to get better. You will have difficulty proving your oral contract, but I would suggest setting for the details to a local business litigator who can give you legal advice.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
Family Law Attorney
I agree with Mr. Kazachi. Courts prefer to interpret a written agreement. But if no written agreement exists, they will interpret the agreement based on the behavior of the parties. You should talk to an attorney who can outline your options to you more thoroughly at this point. The thing that's missing here - is the behavior of the other party is when they were meant to pay you. It could seem (to the court) that you were meant to get paid only after a certain something happened (like working for X months, making a certain quota, or any other event).
Is this “helpful” or a “best” answer? Please mark it if it was, and I hope it was! Thank you! Nancy L. Ballast is an attorney in west Michigan, with a practice centered on family law, estate planning, and criminal law. www.nancyballastlaw.com
Contracts / Agreements Lawyer
How strong is your case? An oral contract can be enforced in court in most cases. The law may require a writing, however, but ways exist to get around the writing requirement. I see nothing in the facts you state that would require a written contract to go into court and enforce your rights. That said, oral contracts can be difficult to prove. You run into the situation where a judge is forced to decide on a "he said, she said" basis. The party having the burden of proof usually loses. The parties seeking to enforce the contract usually has the burden of proof in showing that a contact exists and the terms are reasonably certain. On the other hand, emails, letters and notes can be used to show the terms the parties agreed to. Without more details, it is difficult to say how strong your case is. Working 5 months and generating $50K in revenues is a good start. You state that the other party is not willing to honor your initial agreement. If they are not willing to commit perjury, then your case would be much stronger. It sounds like they will take the position that your never agreed to the percentage you will take from the revenues and that you were still negotiating this term. If so, then why would they expect you to work for 5 months with this term blowing in the wind?
What are your options? You have stated the two main options you have. With litigation, however, your options open up. You can sue for declaratory relief. That is, you can ask the court to declare what the terms of the contract are based upon the evidence. This will not happen over night. The court would likely send you to mediation with a professional mediator. The purpose of the mediation would be to work out your differences with the other party without resorting to a trial of the case. This is another option for dispute resolution that might be appealing to you.
The bottom line is that you need to review all this with a lawyer versed in contract law and employment disputes. You need professional advice before making your decision. Ultimately, the decision will be up to you.
James C. Glassford
Attorney at Law