In February I purchased a client list from another business when the owner/operator was moving out of the city. The agreement was for 60% to be paid up front, with the rest to be paid roughly 3 months later. The contract stated the seller was to notify the customers by email of the change and endorse me as the replacement. He was also to post a statement on the businesses web page. Despite my numerous reminders/requests that he send the email, he did not as well as the website was shut down, almost immediately.
The list turned out to contain 30% less contacts as verbally stated, with several contacts being listed twice. I finally emailed the contacts myself. Nearly 10% were returned "undeliverable" while an unknown number never would have seen my email if it was routed to their spam. I also have discovered at least a couple of customers of his who were not named in the list.
Shortly before the remainder was due he emailed me to ask about final payment. I did not respond until the following day. I told him, due to his lack of fulfilling his end we could renegotiate the final payment or consider the contract fulfilled. I did earn some profit from the list, but far less than the expectation.
About a week later I was contacted by another business owner who asked me for advice about an opportunity he was offered. Seems the seller had advertised the list for sale again... and did so before I told him I would not be paying the balance under the circumstances.
My question: Even though I have not lost money is it worth pursuing a breach of contract and fraud complaint? Had he done everything as promised I feel the potential return would have been much closer to my expectations. Or is it a lost cause since I have not lost money. I would be happy to either recover the 60% down payment or compel action as agreed in the contract, however the latter my be ineffective as more time passes and the customers find alternative service providers.
Answered on: 6/03/13, 6:33 pm by John Kirby
This is a rather difficult question. There is no clear answer to this. You have correctly put your finger on the issue, which is the measure of damages in this situation. It seems that the seller has breached the agreement. The complexity will arise, however, in determining the value of the clients you have obtained, and the value of those you would have obtained if the seller had complied. In theory, you are entitled to the "benefit of the bargain," which would include the profits from these new clients. As a practical matter, it might be impossible to prove that. The seller's conduct might even constitute fraud, or an "unfair and deceptive" act, which would provide for punitive or treble damages. The other issue is whether a judgment against the seller would even be collectible. You might want to consult with an attorney in greater detail to discuss your options.
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