If we paid a down payment for a service by check but with no contract and the business went out of business, how do we get our down payment back?

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If we paid a down payment for a service by check but with no contract and the business went out of business, how do we get our down payment back?

Asked on February 2, 2015 under Business Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If the business is out of business, you may not be able to get your money back--legally, you are entitled to it, but practically, there must be someone with money whom you could sue. However, if the business was an LLC or a corporation ("inc."), then you could only sue the business, not the owners; but if the business is out of business, it either 1) may have not assets (money) to pay you; or 2) may have been dissolved and no longer even exist to be sued.

However, if the business was not an LLC or a corporation (for example, it was a partnership or a sole proprietorship), in that case, because there is no separate legal entity--there is only the owner(s)--you could sue the owners personally, if you know or can find out who they were, for the money. In that case, you may be able to recover the down payment.


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