Loan from friend with no stated repayment plan

[mamony]

My girlfriend was recently 'sued' by a former friend of her's. My question pertains to the validity of his claim.


Basic story is as follows:


In early 2009, over a few months, he deposited money via cash deposits into her account. At the time, she had stated she didn't know when or if she'd ever be able to pay him back. He told her at the time that it didn't matter; that what was important was her livelihood.


About a year later (May 2010) he contacted her stating he wanted to be paid back. She told him that she was still not financially stable but was willing to work something out when possible.


Recently (over the past month) he has once again stated he wanted to be repaid. She had told him that she can afford $100/month but that was unacceptable to him. She was willing to discuss it with him over the phone but he kept insisting to meet in person; which she does not want to do.


Through e-mail, he has acknowledge that he was agreeable to her paying him back when it was financially possible for her to do so. (Which she isn't; she is dependant on her brother and me to pay all her bills and provide a decent living condition.)


His claim is for $7500.


This is in Sacramento, CA.


Nothing was ever put into writing and signed. Initially it was by word with a couple of e-mails.


I am aware that CA allows for oral contracts. However, from what I've read, contracts in CA must be in writing if the payment should take over 1 year. Also, I'm confused as to how she can breach a contract that has an indefinite and open-ended repayment "agreement".


Thanks in advance

 

[fredrikklaw]

It's enforceable, but not for much!

Well, a Quasi Contract which is more often than not referred to somewhat erroneously as an "oral contract" is just as valid and therefore enforceable as one with its terms reduced to detailed writing in all the states of the Union as it is a part and parcel of the Contracts Law; Period. The main difference between a quasi and an express (written) contract is the measure of damages and the afforded remedies.

The other point which you raised about contracts of one year and over and their need to be in writing is a requirement under the Statutes Fraud which also alludes to a few other types of contracts as well, such as marriage, land purchase, and answering for the debt of another. And by the same token as above, the lack of writing in this situation does not invalidate the contract.

But before any of this can come into play, it has to be determined whether there even exists a contract between your friend and the ex-girlfriend, which in my humble opinion, there does not seem to be a contract here which obligates the ex-girlfriend to make payments or payment plans;; not by a long shot. Contracts are formed when all the essential elements that go to form one are met and satisfied and while I will not bore you with a long lecture, suffice it to say that the initial Offer & Acceptance process, (which includes the even more important meeting of the minds requirement) is to Contracts Law and contracts formation what eggs are to omelets.

Your friend made periodic deposits that were not only made voluntarily and without any requests by the ex-girlfriend, she also made plain the fact that she was in no situation or did not foresee any repayment of the money, to which your friend responded by yet another good will gesture, saying "what was important was her livelihood." The morally unacceptable and unsportsmanlike nature of the demand by your friend notwithstanding, if I were the ex's attorney, I would argue malicious prosecution since your friend all but created the situation himself; which I am not.

As for damages and remedies available to your friend should he prevail in any future legal proceedings; as I said the main difference between quasi and express contracts are the available remedies. While a prevailing party in an action brought for breach of an express contract can recoup all damages suffered as the result of the breach, a plaintiff in an action brought for breach of a quasi (oral) contract, can expect to recoup only what is referred to as reliance damages (casually called out-of-pocket-expenses) and nothing more.

And the courts afford such a remedy to the plaintiff not because they feel for him. They do it only in order to avoid unjust enrichment by the defendant.

fredrikklaw

 

[mightymoose]

It is possible that your girlfriend's acknowledgement of the debt and offer to pay it will keep her on the hook if the ex were to push the matter into court. By offering to repay it she has essentially acknowledged that it is a debt and was not a gift. However, if the ex does not have any evidence of this acknowledgement and offer to repay then he is probably up a creek.

 

[maltease]

Since those emails seem to be the only written record, you should review the emails to see what admissions were made by your girlfriend. Remember fredrikklaw's 3 points about: initial offer, acceptance, and meeting of the minds.