Contract Dispute

[TieRod]

Jurisdiction

California

I am going to write out the contract verbatim (leaving out names) so you can get a mental picture. This contract was executed as written verbatim.

Start:
Oct 24, 2014, I Borrower do hereby agree to pay to the lender the sum of $9000. This loan is to be repaid in full no later than March 5, 2015, free from interest. if this loan is not paid in full then a vehicle, a 2006 Ford f-150, which is hereby used as collateral for said loan, a 2009 Ford Mustang owned by borrower shall be sold by lender to recuperate the $9000 lent and any remaining money received from the sale of the 2009 Mustang shall be given to borrower. the lender agree to use all resources available to sale vehicle at market value.
END;

The borrower did not pay the money back by March 5, 2015, and so, the lender sold the 2009 Mustang days after the borrower's deadline. The lender kept $9000 and contacted the borrower to come get the remainder. The borrower refused to get the remainder and said that the truck should have been sold since that was used as collateral and not the mustang. The borrower wants back the exact mustang that was sold.

My question : Who will prevail in court, borrower or lender?

 

[ElleMD]

Given only the facts presented here, and assuming this was a contract and each party was competent to sign such a contract, each party should expect to hold to its terms. Both parties agreed to this, so I am not sure why the borrower is now objecting or on what grounds.

 

[TieRod]

Hello ElleMD, thanks for the reply:

Both parties signed the contract and both was in sound mind at the time of signing contract. However, the borrower wants the mustang back and if any vehicle had to be sold then the truck should have been sold since it was used as collateral. As you can see on how the contract was written, some kind of way the vehicles got switched around in the contract where the mustang can be sold to recuperate lender's money.

 

[adjusterjack]

some kind of way the vehicles got switched around in the contract

So you admit that the intent of the parties was for the truck to be the collateral and not the Mustang.

Were that to be revealed in court I think the contract would be ruled ambiguous.

Ambiguous contracts are construed against the writer of the contract, in this case the lender so I think the borrower would win.

I'm not sure that the court would compel the lender to purchase an identical Mustang but the borrower could be awarded damages for the loss of the Mustang.

On the other hand, the judge could theoretically just punish both parties for being incredibly stupid.

 

[TieRod]

Hello adjusterJack, thanks for the reply:

I personally don't know what the intent was for the truck to be used as collateral or the mustang because I was not there at the signing of the contract. After the borrower showed me the contract and before they go to the court the borrower just wanted to know the odds of winning the case, or some other alternative that can be used by the judge/magistrate.

 

[ElleMD]

Contract law varies greatly by state but as a general rule, that is in writing and signed by competent parties stands. If the agreement is clear that the Mustang would be sold, that is what the parties should have expected to happen. It is unclear why the borrower would sign this agreement if that is not what was intended. That is what will have to be explained to the satisfaction of the judge. It is also unclear why the borrower waited to challenge the contract until months after the car had been sold.

 

[TieRod]

That was my interpretation on the writing of the contract when I read it. that the truck would be collateral but then the mustang would be sold to recuperate lender's money. Also the borrower left the mustang with the lender while the borrower left the state to live in another state for awhile before returning to California. Which the borrower returned after the deadline and refused to answer the lender calls and emails. After multiple attempts to contact the borrower the lender then sold the mustang. The lender didn't sale the vehicle until May 2015.

 

[ElleMD]

Given that the Mustang was left with the lender so that it could be sold if needed, I really don't see any way around it. Both language and action were clear.