Jewish World Review August 11, 2000 /10 Menachem-Av, 5760
Yes, a contract means something
DEAR BRUCE: We operate a small water treatment company. A couple ordered a system that, because of its large size, had to be specially ordered. They paid using their credit card. We received the system. Nine days after they signed their contract, they decided to cancel the order. Because it was a special order, we still had to pay for the system. I tried to explain to them that the three-day recision period was over, that this was a special order and they could not cancel. They said that they talked to the attorney general and the credit card company, who said that we have to honor their cancellation even beyond a three-day recision. Is this true? Doesn't a signed contract mean anything anymore? -- D.H., via e-mail
DEAR D.H.: I don't know where they are coming from, but after the three-day recision period is over (and that only applies to items over $50 signed away from the vendor's place of business), they are on the hook.
They are blowing smoke. I doubt very seriously if they had any conversation with the attorney general since this is a civil matter, not a criminal matter, and I am quite confident that no one told them they can cancel just because they feel like it. If you want to hold their feet to the fire, go to it.
I think people have to recognize that when they sign a contract, it cuts two ways. If you called them nine days later and said, "Sorry I don't want to sell it to you at this price", they'd scream bloody murder.
DEAR BRUCE: I was sitting at a traffic light, minding my own business. The fellow behind me was talking on his cell phone and wasn't paying much attention when he rammed into the back of my 6-month-old car. He apologized and said it was his fault. What else could it have been? He hemmed and hawed about his insurance. My car was mangled, and I wanted to get it straightened out as quickly as I could, so I collected from my own company and had to pay the $200 deductible. My company says that they are going to sue him, and if they are successful and get back all of their money and the deductible, they will give it to me. Otherwise, I am stuck. If I don't get the money back from my insurance company, can I go after this guy? After all, he's the one that caused the damage. -- T.S., Topeka, Kans.
DEAR T.S.: It is true this fellow did the damage, but you assigned your rights to him under the terms of your policy when you collected on the collision. The company is going to subrogate, which means that they are going to take action against him to try and recover their money. You gave up your right to pursue him when you took the money from your company.
DEAR BRUCE: I always have tried to be honest and meet my obligations, but I have done something that I realize was foolish and I don't know how to get out of it. I have always wanted to own my own business, the American dream. I thought that I knew exactly what I was doing. As it turned out, I was a babe in the woods. That's the good news. The bad news is that I financed it with four credit cards, accumulating more than $80,000 in total owed on these cards. I am doing a fancy dance just to make the minimum payments. On my income of $37,500 a year, there is absolutely no chance that I will ever pay them off even if I could maintain the minimum payments, which I don't believe I will be able to do. I have always been taught that if you borrow money, you must pay it, but at 28 years old, I shudder to think that I will have to pay off this debt for the next 25 years. I have no assets whatsoever other than my paycheck, which comes every two weeks. I am mortgaged to the hilt. What would you suggest? -- N.C., Yorktown, Pa.
DEAR N.C.: I am not in favor of bankruptcy when there are alternatives. But in this case, given the magnitude of your debt, I don't see any alternatives. Yes, what you did was foolish, and yes, the credit card companies deserve to be paid, but they are in business and they know that a certain portion of their lending is going to go sour.
At your age, my inclination would be to sort things out and be certain to use a bankruptcy attorney to make sure that everything is done correctly. Then start out with a clean slate. My readers take note: The idea of financing a business on credit cards is an extraordinarily risky one and not a risk that I would ever encourage you to
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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