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I am trying to negotiate a settlement agreement with a corporation that I have discovered is suspended by the secretary of state

Van Nuys, CA |

The settlement letter and check they have sent me is unacceptable. However I am worried that I could end up with nothing if the company goes bankrupt. The question is , if I cash the check, can I later void the settlement agreement since the corporation was suspended at the time the agreement was made?

By the way this is happening in the state of California. This is a very bad company and the only reason they are settling is because I have indisputable evidence of fraud.

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Attorney answers 2

Best Answer
Posted

If you signed the settlement agreement already, you generally cannot back out.

You do not indicate the reason or reasons why the settlement check is unacceptable. However, the downside of not taking settlement money is that you will likely not be able to collect anything (or the cost of litigation will far outweigh your recovery) such that it iwould not be economical nor prudent to push the suspended corporation into litigation.

The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.

Asker

Posted

It is my understanding that contracts entered by suspended corporations can be voided by the customer, why would a settlement agreement be any different?

Frank Wei-Hong Chen

Frank Wei-Hong Chen

Posted

A contract executed by a California suspended corporation is voidable at the demand of the other party, but not void. The suspended corporation may take the steps needed to revive the corporation which in turn would enable the corporation to engage in business, and defend or bring a lawsuit.

Asker

Posted

Yes, I am aware of that. The question I am trying to get an answer to is simply this. Can I void a settlement agreement with a California Corporation if the corporation was under suspended status when the agreement was made?

Asker

Posted

I have not been requested to sign the agreement. It says, we hope you settle this matter by cashing the enclosed check as full and final payment related to your disputed contract damages. My actual damages are $36,000. The check is for $21,000. In the agreement they are basically claiming that they have done no wrong.

Frank Wei-Hong Chen

Frank Wei-Hong Chen

Posted

Virtually every settlement agreement would say that the defendant denies admitting liability in the recitals.

Posted

Corporations do not get discharges in bankruptcy. No one can discharge a debt that is proven to based on fraud. However, the corporation can liquidate and leave you with little or nothing. If you accept the check, then you agree that it settles the amount owed. You cannot reverse your agreement later.

Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.

Asker

Posted

Corporations under suspended status are not legally supposed to conduct any business. Contracts entered into while a corporation is suspended can be voided by the other party. Why couldnt a settlement agreement be voided as well?

Mitchell Paul Goldstein

Mitchell Paul Goldstein

Posted

The issue is that you settled any claims you had against the corporation, which still exists. The settlement is legally binding.