My business was contracted to build a machine for a company in Pennsylvania at a cost of $32,500 our contract states NO due date and the build is taking longer than expected. The purchasing company has out of the blue decided not to do business with us and they have had their check refunded by their bank. This has put a block on our account and a negative balance of $-28,500 as the funds were already distributed among parts and labor. The company will not return our calls and we are not sure what direction to take. Is this legal and if not what should we do! Any advice would be greatly appreciated.
2007-01-02 12:28:45 · 8 answers · asked by Joshua S 2 in Business & Finance ➔ Small Business
UPDATE: This is considered a lien on our checking account... all funds are frozen until further notice and the account cannot be closed, the funds available cannot be transferred, and all outstanding checks were credited back to the account but have not bounced. The check was cashed at the end of October and this refund was issued the 30th of Dec.
2007-01-02 12:54:33 · update #1
The Particular machine is a custom build and requires a good bit of time and concentration. The company which purchased the machine set no time limit on the build and cleared our company to purchase parts and supply labor so that we could focus on it's assembly. The company was educated when they ordered the machine and they seemed to understand that the delivery date was uncertain because of many possible factors. It is best explained by comparing ourselves to a pizza delivery boy who was caught in traffic and was a little late. The customer stole the business profit, as well as the tip, as well as our wallet and car keys... just because they didn't want to wait a few extra days. I can understand if they wanted a refund, but there are certainly better ways of handling it. Now my business is at a standstill because of their actions.
2007-01-02 17:35:00 · update #2
Banks cannot just freeze an account tp settle a dispute. In my banking experience, banks can only freeze accounts in cases either IRS seizures, or of fraud which would also involve both the federal reserve and the banks insurer, i.e. FDIC.. Since you say it is from a customer, I would assume the freeze order was issued by the fed. Bank regulations require any fraudulent activity be reported within a very small time frame once the bank is notified and verifies the fraudulent action. IRS seizures are immediate and usually not reversible. A customer could not "put a lien" on an account, that would require a court ordered judgement against your company.
2007-01-03 12:05:21 · answer #1 · answered by Anonymous · 0⤊ 0⤋
You don't state HOW much longer than expected the job has taken, and whether there was an implied time frame. If it takes five times as long as it should prudently be expected to take, then I could see their giving up on it. But if this was something special, that has never been done before, and has no precedent, that'd be a different story. Still, the fact that they were able to simply pull their own "refund" out of your bank and get a freeze clamped on your account without a court order stinks like lutefisk. I'd talk to an attorney, and very soon. Even if you broke some term in the contract, getting their hands on your money takes a court order. If I buy groceries and don't like them, I can't just go back to the store and help myself to money out of the cash register! Plus, money already spent in good faith on parts and labor has to be taken into account. That's not the same as if you'd just sat on it and done nothing at all.
2007-01-02 22:46:08 · answer #2 · answered by BuddyL 5 · 0⤊ 0⤋
If you has already deposited the check in your bank account, it would be impossible for the company to have their check refunded by their bank. If the time had been short, the other company could have put a stop payment on the check, but there are certain time frames to do this. You would need to check with your bank - or get a good attorney.
2007-01-02 20:34:35 · answer #3 · answered by carole 3 · 0⤊ 0⤋
I work in the manufacturing business also. This has happened to us as well. It is legal, otherwise the bank would not have made the transaction. It stinks and is unfair. I recommend suing the company for the money you were out in building this machine, parts, labor, materials, etc. Good luck.
2007-01-02 20:32:30 · answer #4 · answered by I know, I know!!!! 6 · 0⤊ 0⤋
It is likely that it is legal someway or another to zap your account for the money. Banks expose themselves to huge fines (or at least they used to be) for violating banking regs.
Even though it may wind up as a technically legal thing to do, if your signed contract with the the purchaser is enforceable (and it takes a lawyer to find that out), then you can sue the purchaser for fraud and breech of contract. They will more than likely counter-sue you, so be prepared for that.
2007-01-02 20:40:41 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Dispute it with the bank because that is not a valid lien without a court order. If the bank givers you a hard time. Then tell them you will contact your lawyer.
2007-01-03 08:37:59 · answer #6 · answered by Anonymous · 0⤊ 0⤋
thats not a lien on your account by them having their check refunded by their bank your account became overdrawn. I'd contact their bank and find out how/why they were able to have their check refunded or did they issue a stop payment on it before it cleared?
2007-01-02 20:32:52 · answer #7 · answered by singledad 7 · 0⤊ 0⤋
first u need to go to court and obtain a judgment against them. this is a legal document saying you have a valid claim for x amount of money. once you get that, you can go after their assets, ie vehicles, real estate, bank acct., etc.
2007-01-02 20:38:39 · answer #8 · answered by njyogibear 7 · 0⤊ 0⤋