If I had a verbal contract to buy a lathe but theseller sold it out from under me to a guy who has all the cash?

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If I had a verbal contract to buy a lathe but theseller sold it out from under me to a guy who has all the cash?

My husband had a verbal contract to buy a piece of equipment for $10,000. He paid $2500 down and had given the guy the first check for $1000 within the last week and a half. The $2500 check was cashed but the $1000 hasn’t yet but the guy sold the equipment out from under him for cash yesterday. Can we make him sell it to my husband or do we just have the right to our money back?

Asked on March 4, 2012 under Business Law, Colorado

Answers:

Eric Eisen

Answered 9 years ago | Contributor

For some reason this question ended up in our spam box and we just found it. Mr. Cappuccio and "SIM" each make good points. If you had walked into our office today with this story I would be focusing on getting the money back NOW, because the seller, having shown no reticence in breaking his agreement with your husband, may just be the type who will now say "what money?" or otherwise disappear. If you cannot get cash or a cashier's check in 24 hours I would contact a local small claims attorney and suggest a prompt action against the seller AND the buyer on the theory that the seller had no right to sell what had already been sold to you. Your problem is one of proof; how do you establish the contract to purcahse the item?

 

Ronald Cappuccio / Ronald J. Cappuccio, J.D., LL.M.(Tax)

Answered 9 years ago | Contributor

You had a contract. Since you made a deposit, and it was accepted by the seller, the contract became enforceable. Unfortunately, the seller has sold the machine, so you cannot force him to turn it over to you without going to court (more $ than it is worth.) Nevertheless, you can sue the seller for damages. The problem is the amount is so small, it is not worthwhile. Just get your money back and avoid this crook.

I hope this helps!

Ronald J. Cappuccio

www.BusinessEsq.com

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If the equipment has already been sold, you cannot force the seller to sell  it your husband--once it's been sold to a good faith, bona fide purchaser, it can't be taken back from him. If it has not actually been sold (i.e. the sale is still pending), you *may* be able to get a court order requiring the seller to sell it to you (this is called getting an order for "specific performance"), but it's unlikely; first, you'd have to file an action right away, and second, courts dislike requiring specific performance except in real estate cases or if you can show there is something special or near-unique about this particular lathe.

You can definitely get your money back (if the seller won't return it voluntarily, you can sue) and you may be able to get additional compensation, too. For example, say that this was a good deal, and that to find a comparable lathe to replace it now costs you $12,000. You could potentially get an extra $2,000 of compensation, to reflect the difference in price, or price premium, you now have to pay due to the seller's breach of contract.


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