Consumer Law, Warranties Percentage Paid on Contract

[1djca1]

I have a contract that states: this agreement dated X is made by and between LK and DA and is good through and until XX.
On this date LK will take a loan from DA in the amount of 40k. This loan will be used by LK to open a business and purchasing materials.
This loan will be paid back once a week to DA in the amount of 35% of the amount LK produces.
An example is the following: if LK's total amount of tattoos generated is $1k the pay to DA is $350.00.
Investment: At the bare minumum, $350.00 a week, DA will have a total investment of 40k with LK. His rate of return at the bare minumum will be $84k at the date of termination of the contract.
My question is do we calculate the 35% at the gross amount or the net amount minus all advertising and shop costs etc?
Is it implied that DA will receive a bare minumum of $350.00 per week and a minumum total return of 84k?
Thanks

 

[Michael Wechsler]

My question is do we calculate the 35% at the gross amount or the net amount minus all advertising and shop costs etc?
Is it implied that DA will receive a bare minumum of $350.00 per week and a minumum total return of 84k?

I can't answer your question because this is a matter of "ambiguity" in the contract. There are a couple of general rules that can be applied (not in every jurisdiction) such as the concept that the party who drafted the contract had the ability to make it understood and not vague and bears responsibility for vagueness. Only a court can decide for sure and I don't think it will ever go there.

Let me ask you this - what did both of you agree upon? You must have discussed this. If you're trying to deal with a technicality, remember that there is a personal relationship here that you will destroy completely if you are dishonest about what you, in your heart, know was clearly understood by both of you. If you're having a challenge with the payments realizing now how difficult things are, you're best to work it out and point out that it was ambiguous but you'd like to make things clearer and also set proper expectations. It doesn't help him if you go out of business either.

That's the best I can say on this subject for now. On the surface I'd guess it is a percentage of the gross because the net is always a topic of negotiation and isn't included in the agreement. Gross is an easier number to use and seems likely what the parties agreed to. Good luck with this and hope it and your business is successful!