Lease To Purchase Agreement

I was part of a lease to own equipment agreement.I left the company and wrote up a ‘relinquish rights and responsibilities for all business’ agreement and got it notarized, because I was giving my part to the other business member. She still wants full responsibility of all issues and business matters. An issue with the lease to purchase agreement has come up because the current business owner missed payments. The equipment owner one leasing it took back the equipment and sold to a different business owner. Can the owner whom we had the agreement with come after me for anything to do with the lease or payments? Can the owner whom we had an agreement with hold us liable for money he didn’t make from reselling the equipment knowing he didn’t try to get a good price when reselling it (i.e. wanted $45,000 and resold it for $5000)?Is there any way that I can get out of this situation altogether knowing the current business owner is responsible and is willing to deal with this issue alone?

Asked on January 24, 2018 under Business Law, Georgia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

No, you cannot get out of your obligations under the agreement without the other side (the equipment owner) agreeing to let you out: the lease-to-purchase agreement is a contract, and it requires the consent of all parties to the contract to amend or modify it, including to release someone from their obligations. The agreement between you and the other business owner has nothing to do with your agreement with the equipment owner. 
If sued by the equipment owner, if you can show that he took an unreasonably low amount for the equipment and/or did not take reasonable steps to sell it for a fair price, you can potentially use that to reduce what you are liable for: he has a duty at law to "mitigate" (or minimize) "damages" (or his losses) and can only recover from you for any amounts due under an agreement to the extent he did not make good those losses after reasonble efforts. For example, if you owe $45k and can show that the reasonable resale price for the equipment (given age, condition, and getting a sale in a reasonable time--i.e. not holding onto the equipment for an unreasonably long time looking for the perfect or best deal) was $20k, you might then be liable for the remaining $25k ($45k owed - $20k reasonable sale price).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.