Lease To Purchase Agreement
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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 4 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).
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