Am I entitled to keep the money?

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alchemist

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A few days ago an individual came to look at my car wich was for sale. They said that they wanted to buy it, but I wouldnt accept a personal check for the full amount, 10,500$ so they wrote me a personal check for 500$ to not sell the car till they pay the remainder in the form of a cashier's check over the weekend. Now i get a call a day or two later from they saying that they no longer want to buy the car, and they want the 500$ check back? Isnt the 500$ mine since it was paid to me as partial payment on the car (and as such to not sell to anyone else). The check has deposit written on it by the issuer. I've had to to tell three individuals that I've sold the car before this happened. So is the 500$ check mine? If they try to stop payment is that illegal?
Thanks
 
This is a murky situation. If they put down $500 for you to hold the car for the weekend, then they paid $500 as part of an option contract, whereby they had the right to purchase the car at any time over the weekend. If the deal was that you wouldn't sell the car because they were going to pay the entire amount, then the car was sold and this was partial performance on the agreement that was struck. They would be liable to pay the entire amount under the deal.

However, I'm not so sure that they paid the $500 for the option. It seems that they could likely have paid it as a good faith deposit. There is no mention that the deposit is non-refundable and this should have been stated if this was part of the deal. I don't think the issue is whether they stop payment but whether you are entitled to enforce the deal. If you went to court, I'm not sure you'd win, given the facts.
 
thank you for the reply, I believe that the payment was to keep me from selling the vehicle (as an option to purchase expiring the end of this weekend...im a finance MBA). I fullfilled my end of the deal, and wish to keep the payment. I have consulted a few friends who are in various stages of law school, and they agreed that I should keep the money as I provided the service. I'm not trying to get the entire 10,500$ as i still have the car and can sell it, but the 500$ should be mine because they didnt pick up the car today.
Thanks
 
The friends in law school should be focusing on providing you with the standard analysis -- it will help them with their exam scores! :D A contract is effective when there is an offer, an acceptance, and consideration exchanged. It can also be seen as two promises (the offer and acceptance). However, both must know what the deal is and this was not a service contract but a sale of goods.

In rereading what you wrote, it seems that your understanding is that it wasn't an option contract but an acceptance of the offer you made to sell the the car. The mistake your law school friends make is in stating that you provided part of the service when the proper analysis would be that the buyer partially performed on the contract. You made an offer to sell the car for $10,500.00, they accepted the offer, and payment terms were that they would pay $500 by check and $10,000 in a cashier's check. Therefore, the buyer may have breached the contract and would be liable for damages. Was the title signed over to the car? Not likely. You should also ask your friends about the "statute of frauds" which requires that contracts for the sale of goods for a value greater than $500 be in writing for the precise reason of what happened here -- it is difficult to determine exactly what the deal was.

Assuming the buyer breached, should damages amount to $500? I'm not sure this was a point agreed upon and my understanding of the law is that a breach of contract in this context would allow you to recover "expectation damages", the amount you expected to make as the benefit of your bargain. You still have the car to sell and if the market price dropped, you could recover the difference. You might also be able to recover other damages that could result (ask your friends about reliance damages and consequential damages) but I'm not sure that you have any here either.

Now if the other party disagrees and they take you to court, they will may say that it was a good faith check to hold the car and that they would decide over the weekend what to do. What happens if this went to small claims? I think it's likely that they'd get some of the money back as you were not truly damaged as (1) it's unsure whether there was a deal that was accepted and completed, (2) even if there were, you weren't truly damaged as a result. Regardless of these points, small claims decisions often skirt the limits of the law and awards are made of what "feels" like the moral decision... I'd think you the court might have you pay a significant amount back to the buyer.

Does that mean you don't have leverage -- you do as you have check in hand. As you are an MBA in finance, you can surely appreciate what that means. You can also appreciate the fact that when you make deals of consequence you always get the pen to paper as soon as possible! You may want to settle here and avoid the dispute and the time you may end up spending with it...
 
Yeah, I didn't think with my head on this one, I knew I should have dont it all in writing, but stupid me, I didnt. As a result of them saying they were going to pick up the car on sat, I had to tell three potential buyers that the car was already sold and I was awaiting pickup/payment. So i was affected by the potential loss of a sale if for some fluke I dont sell it.
As for leverage, I know what you mean, just having the check in hand is some leverage, but not much....what would you suggest I do?
Here is another point to the whole thing......The check was written by the father who said that he would be down on Saturday to pick up the car and pay the remainder...the son didtn't have anything to do with it except tell his dad he wanted it. The son is the one who said that he didn't want it anymore, I have had no contact with the person who wrote the check (father) and entered into this agreement with......and since I havent heard from him and his option has expired, does this make any difference to the whole thing since the check and the agreement was between the father and me, and not the son.


as for saving time, I'm in no hurry, I just want to get whats "rightfully" mine
 
Perhaps you should negotiate, but think of the fact that it's only $500 and the pain that may be involved in keeping the entire amount. I'd act to limit the damages - I'd call up the other buyers immediately and see what I could do. If one accepts for less money, e.g. $10,250, I'd call up the father and tell him that if he wants the check back it will cost them something out of the check to make up for what you lost as a result. This way you'll get your full $10,500.

As I said in my post, it doesn't sound like an option from what you state, but an actual sale. If there really was an option you have a weaker case, IMHO. Additionally, if you made a deal with a teenager, it is possible that the teen could back out of the deal because he/she is a minor.

Can't tell you what to do but I think the logic makes sense. The amount in controversy is small and in making a sale, you have a better chance to still get your $10,500 with minimal hassle.
 
Yeah, I understand the logic, but I can not contact the individuals who I told I sold the car....they called me from an ad I ran, the son isnt a teenager, he's a college student. I also had to renew an advertisment for the car since i called already to cancel it. The confusing part i guess is who I made the deal with, I suppose it can be said that verbally it was with both, but the check was written by the father. My problem is that the longer I do not sell the car, the more it will depreciate (especialy now that a new version of the car is out), and the loss of the potential sale that I can not get back.
 
What would happen if i cashed the check in 6 months...after any possible hold would expire. What happens if I sell the car for a lower value in a few weeks?
 
Your cashing the check in six months would probably be questionable conduct and you would be cashing a stale check. It might not even be honored. I don't think it's a good idea. If it were me I'd contact the son or father, whomever I could, and let them know my intentions. Best would have been to do this when the father called you to "cancel" the deal.
 
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