Legal Question in Business Law in California

While on vacation in Japan,I entered into a verbal agreement to supply labor and materials to do a remodel job for a client here in Japan, I went back to the US and e-mailed him a written proposal outlining the work to be done and the amount of funds I would need from him to purchase materials and ship by container fob port of Yokohama, I told him in the proposal and on our initial meeting when we had agreed to the project The amount of materials including shipping was $ 20,000 the total Job was $ 44,300 in Japanese Yen, I received into my company account the amount of

$ 20,000 which I then proceeded to purchase materials and load and ship container,One week before the container arrived in Yokohama he informed me that he would like a written contract which I produced underlining what I had written in my initial proposal, He disagreed with the conditions of the contract

and wrote his own changing many of the original conditions, ( ie that whatever

materials were left over from his Job that I would purchase them back at he original price, I informed him that as we had a existing agreement and that materials were part of this agreement they belonged to me after the work was completed.Everything is now at a stand still and he is demanding that I pay him back the $ 20.000 deposit on the Job. My question is is the verbal agreement valid and my next question is all of this was conducted by e-mail between him and myself I own a construction company in California ( Retired ) and he works for Morgan Stanley in Tokyo as a trader, all of the e-mails were sent using Morgan Stanleys equipment while he was supposed to be trading for the company during company hours and on company time.I realiese that suing him in Japan is worthless but my understanding is that Morgan Stanley can be held accountable for the actions of its employees, All of our transactions were held in the Us . Thank You for your help Mike Wallace


Asked on 9/07/09, 8:44 am

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I don't see any basis upon which to hold Morgan Stanley liable. It is not "in privity" with you, and the theories upon which employers are held liable for acts of employees apply to torts, such as negligence, not contracts. Further, there is a major inconsistency in your arguments. Your first like says you entered into a contract while in Japan. In your next-to-last sentence, you say all transactions were held in the U.S.

I don't know what Japanese law has to say about jurisdiction and applicable law, but under most U.S. law rules of thumb, the suit should be brought in Japan and Japanese commercial law should apply. The contract was entered into in Japan, each of you rendered part performance based on the made-in-Japan oral agreement, and the contract was/is to be performed in Japan.

Also, when materials are shipped fob Yokohama, it's very likely title passes in Yokohama and that's another reason Japanese law probably applies - rights to the goods, any security interest, etc. would likely be goverened by the law of the country where title passes.

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Answered on 9/07/09, 12:55 pm
Edward Hoffman Law Offices of Edward A. Hoffman

I agree with Mr. Whipple, but I want to add to what he wrote re Morgan Stanley.

Even if American law applied to your case, you could only hold Morgan Stanley liable if the defendant was acting within the course and scope of his employment when he contracted with you. In other words, you would have to show that he made this deal on Morgan's behalf. You obviously don't believe that he did, and the facts you have provided offer little reason to think he was acting for the benefit of his employer. Instead, it seems he was using his work email address to conduct personal business. That is not enough to make his employer liable.

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Answered on 9/07/09, 11:58 pm


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