Consumer Law, Warranties What should I know about canceling contract.

[CptanPanic]

Ok here is my situation. I run a website that lost its webhost last Feb, and I needed to find some money to get another one. So I had a semi-friend that ran a online buisness that agree to give me $240 for one year of advertising. Note that this agreement was done via IM chat and no formal contract done. Supposedly he has a copy of the transcript, but has yet to give it to me.

The important thing that I remembered is that the agreement was for exclusive sponsorship, but also when other advertisers were added, then the remaing part of the money would go towards the same type and rate as the new advertisers. But it seems they forgot that, and the problem came when I did add new advertisers this month. Which the other night, I then get a dozen of angry emails from the owner and his wife. At first I tried to explain that they are confused about what they remember agreed to, but if they want they could either accept the new situation by putting their remaining credit towards the advertising rate scheme, or recieve a refund for the remaining 6 months of service. So then I get a message today saying either I submit to their demands or returning the site to how it was, or expect a summons. So I don't want to worry about what the original deal was, I just don't want to talk to these people anymore.

So my question is, since I don't want to deal with these people anymore I just want to give them their remaining money back ($120). I was told by someone else that under contract law a breach only entitles them to this amount. So is this correct, and what references can I point to this rule for him so I can get him off my back and not risk future problems.

Thanks in advance, and great site.

Note: I am currently in CA, I made the aggreement in MD, and the advertiser is in Utah.

 

[Michael Wechsler]

I'm not sure I understand completely. You lost hosting for your web site so you moved it to a host who is an acquaintance. You made a deal with him that he would be the "exclusive sponsor" meaning that he got all the ads in exchange for hosting? Not sure it it is that or he agreed to give you cash in the amount of $240? What was the deal in your opinion?

The price for breaching a contract isn't just refunding someone the amount of the contract that was paid and not received. They may be able to sue consequential damages and possibly punitive if the court deems that there wasn't a valid dispute and you simply decided to tell them off. There is also the potential for the award of damages associated with this being an *exclusive* deal that was breached. I don't think it will be a large amount but for such a small amount of money they could be mad enough to spread the news around. It's a very small Internet business world and it may not be worth it to breach deals.

 

[CptanPanic]

To clarify things, The $240 was given by the other person so I could pay a third party for hosting.

The problem is I remeber him saying that I could add other advertisers, but he says he meant that I could add other advertisers after the year was up. So basically we agreed on seperate things.

Brian

 

[Michael Wechsler]

On the surface this appears to be a mutual mistake of fact -- which it isn't. In that case there is no deal, for example, when a person sells a fertile cow to another person and then they both find out the cow is actually barren. No deal because both were mistaken about the cow.

In this instance it could be seen as a unilateral mistake of fact -- your putting forth an offer that is vague and his acceptance of that offer that he understood. Only one party was mistaken about the deal but the offeror bears the burden of such a mistake and the deal is voidable, able to be canceled, by the offerree of the deal. The general accepted rule is that he who drafted the agreement is bound by the vagueness contained within. Additionally, you performed for 6 months on this deal as it was stated in the chat so you might have a problem with proving that the deal is as you say it is. This is the way I understand the law in this matter although others may disagree.

The practical aspect of this partial analysis of limited facts is that it's all theoretical and I know of very few who would go to court in another state over a $120 disagreement. Your liability should not be high although I don't know all the facts. Having done quite a bit of negotiation, perhaps you might want to give them a premium deal and tell them that because of the mutual misunderstanding you'll allow their $120 to go a bit further than other advertisers and settle the disagreement amicably. An advertiser willing to front you money is an advertiser you may want to keep. Also not a good idea to burn bridges. This seems like a reasonable settlement. Otherwise, I'd send them a check with a note stating that you are returning their check and by cashing it they agree that there is no further dispute and that your liability to them is paid in full. You may want to write "paid in full" in the note section of your check and see if they cash it. I'm fairly confident that you should be able to settle this disagreement.

 

[CptanPanic]

Thanks for the help so far.

I just wanted to add that the advertiser was actually the one who offered the deal. So by your statement, I as the oferree can cancel the contract? Do you know anywere I can get a reference for this statement, since I am sure he won't take my word for it.

But I will probably just tell him that it was a misunderstanding, and that the deal should be canceled, and that I will give him back the balance. I haven't decided whether or not to continue doing buisness with him though.

Thanks.
Brian

 

[Michael Wechsler]

What I posted was common law of contracts and is in many legal books. However, I don't think it's a good idea to get into a legal argument because you have to take all the facts into consideration and not just use one potential application of law to apply to the whole situation. Try to settle it since this should be a simple matter to resolve.