Legal Question in Business Law in California

exchange of services versus products

A company on the east coast (one) offer services

A company on the west coast (two) sell tangible goods.

(One) agrees to provide their services at no cost if (two) agrees to sell its own product at a special price to (one)

Based on an oral agreement (one) start providing service to (two).

After a few months (one) realize never purchased any products and do not need produtcs from (two) and ask for full payment for services already provided in the past months.

Is this legal?


Asked on 11/18/01, 3:08 pm

2 Answers from Attorneys
Sheldon G. Bardach Law Offices of Sheldon G. Bardach

Re: exchange of services versus products

If company two can prove that company one never intended to purchase product, this would be considered fraudulent. If company one, intended to purchase product, then did not, it should have agreed to stop furnishing services to company two, inasmuch as circumstances had changed and their was a failure of consideration. Company two does not need to pay company one for its services. There was no agreement for compensation, only an offering of sale at a given price of company two's product.

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Answered on 11/18/01, 3:37 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: exchange of services versus products

I think it should be added that even if there was no fraud, One may be able to recover from Two on other legal theories such as 'quantum meruit' -- the implied promise to pay the fair value of services rendered. The theory itself and its proper application to the facts given are beyond the scope of a bulletin board answer, but if the value of the services is more than a few thousand dollars the aggrieved party should discuss a quantum meruit action with an attorney.

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Answered on 11/19/01, 1:33 pm


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