Results 1 to 8 of 8
-
05-28-2014, 01:24 PM #1
Reputation points: 79
- Join Date
- May 2014
- Posts
- 86
Contracts
I was about to sign up with this lender but now thinking twice about it after reading this part of their contract.
WHEREAS, the Company is engaged in the business of purchasing all of the merchant’s rights, title
and interests in and to a specified amount of the merchant’s future sales (“Future Receivables”) from
qualifying, merchants (the “Program”) in their sole and absolute discretion.
does this mean that the lender will own the merchants rights and title if they default?
-
05-28-2014, 01:56 PM #2
Reputation points: 536
- Join Date
- Jan 2014
- Posts
- 25
-
05-28-2014, 02:26 PM #3
Reputation points: 79
- Join Date
- May 2014
- Posts
- 86
WHEREAS, the Company is engaged in the business of purchasing all of the merchant’s rights, title
and interests in "and" <-The "and" part states that they are purchasing all of the merchants rights and title. On top of the specific amount. Am I wrong?
-
05-28-2014, 02:38 PM #4
Reputation points: 536
- Join Date
- Jan 2014
- Posts
- 25
I have in multiple instances come across lenders that were unable to explain the terms in their contracts satisfactorily, and further stated that they paid their lawyer to draft it and have not actually reviewed it. Truthfully most times the merchants sign on the line without going through the due diligence review. On the few occasions where the merchant actually read and tried to understand the contract thee was a lot of explaining and sugarcoating that needed to be done to assuage their concerns.
In this instance in particular I am unsure exactly of what the lender is implying. Try calling the lender and see if he can explain it, he may try and and give the end around saying that we don't actually seize rights and title and that it is just a scare tactic...
-
05-28-2014, 03:07 PM #5
Reputation points: 99426
- Join Date
- Sep 2012
- Location
- New York, NY
- Posts
- 1,780
If it's a reputable lender I wouldn't get too worked up about it...
-
05-28-2014, 04:32 PM #6
Reputation points: 81
- Join Date
- Apr 2014
- Posts
- 21
The pertinent portion of the clause is "a specified amount of the merchant’s future sales". The recital is stating the company is purchasing all rights related to a certain percentage of the merchant's future sales. For example, if the split was 10% you could read the sentence as follows:
"...the Company is engaged in the business of purchasing all of the merchant’s rights, title
and interests in and to 10% of the merchant’s future sales"
Ownership and title to the remaining 90% would be retained by the merchant.
-
05-28-2014, 04:57 PM #7
Reputation points: 820
- Join Date
- Jan 2013
- Location
- Berlin, CT
- Posts
- 191
-
05-28-2014, 05:03 PM #8