Legal Question in Technology Law in California

Software company lied and breeched a contract

I purchased 125 chat software usage license's from a chat service for the sum of $25000 for a LIFE TIME service use on thier companys server to host the software(for Life). We e-mailed back and forth the details and terms were met and a contract was drawn up. I signed the contract and faxed it back. They took $1335 from me on a monthly basis from my checking account per our aggreemnet. I have paid them $20000 so far...I only have $5k to go and the Chat software company says that they are not going to honor the aggreemnet because it was never authorized by the president of the company...The V.P in sales sold me the software. Throughout the months I had requested my signed contact copy from them and they stated that we never had a signed contract and are taking back all 125 software licenses I bought. Question...I have the original contract they sent via e-mail(that I signed and faxed back) from there company along with all the e-mails regarding the negotiations for lifetime service of the software. The software is now valued at over $2,000,000 over a lifetime of use if resold properly......Do I have a case even if i dont have a signed contract...They did take my money out montly, per the agreement via e-mail....Thanks so much..


Asked on 12/21/02, 8:42 pm

4 Answers from Attorneys

Re: Software company lied and breeched a contract

Reviewing the e-mails and documents would help, but at least as you describe the facts you probably have a case. You should retain an attorney to give you specific advice on how to proceed.

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Answered on 12/22/02, 1:16 am
Edward Hoffman Law Offices of Edward A. Hoffman

Re: Software company lied and breeched a contract

Sounds like a good case to me.

While it is generally true that only authorized representatives can contract on behalf of a business, there is also the doctrine of "ostensible authority", which holds companies to the bargains made by even unauthorized representatives so long as the company has -- through action or omission -- allowed the other contracting party to believe that the representative has such authority. Assuming the person who sold you the software actually was the V.P. for sales, then the company would likely be hard-pressed to explain why you should not have believed he was authorized to sign contracts.

Then there is the doctrine of "acceptance by ratification," which holds parties (whether individual, corporate, governmental or what have you) to contracts where there was neither actual nor ostensible authority to contract for them, provided that the party subsequently accepts the benefits of the contract with full knowledge of what the contract required it to do in return. By repeatedly deducting your monthly payments from your bank account, it seems rather likely to me that the company has at least ratified the agreement.

You should talk to an attorney about this case in more detail, but as I said it sounds like a good one to me. You should feel free to contact me if you want to discuss the matter further.

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Answered on 12/23/02, 1:39 pm

Re: Software company lied and breeched a contract

To answer your question whether you have a case, based on the information you provided, the answer is yes.

There are several potential legal issues that arise. However, the most important, I believe, are the facts that you paid and they received the benefits from the contract.

It sounds to me like they were happy to make the contract at the time. But, now that the licenses appear to be so much more valuable than envisioned at the time, they want to be the ones to reap the benefit.

This is a case where you definitely want to have a sit down or talk over the phone with an attorney. I would also like to see the correspondence/emails and contract that you signed.

I'd be happy to discuss the matter with you and review your materials. You can email me at [email protected] or contact me:

J. Caleb Donner

LEGAL WARRIORS (R)

DONNER & DONNER

Attorneys at Law

805-494-6557

www.donnerlaw.com

email: [email protected]

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Answered on 12/23/02, 2:21 pm
Jeff Lambert Attorney at Law

Re: Software company lied and breeched a contract

If the information you provided is supported by the emails and facsimile documents you described, there is a good chance you have a good case. I suggest you contact a qualified attorney in your area for a free intial phone/in-person consultation. The attorney will likely need to look at the documents you have and get a full history of the events to determine if a contract was in fact made.

Feel free to contact me for follow up if you like.

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Answered on 12/22/02, 12:47 pm


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