Los Angeles, CA asked in Consumer Law, Construction Law and Municipal Law for California

Q: Can a company force payment in full for materials you refuse, even after they had a deposit on the purchase agreement?

Ordered a pergola- which was about $32k, placed a 20% deposit on materials. Hired a contractor through the materials company which advised 60 days later that it would not be able to be installed due to permitting requirements that will not be feasible without a significant investment to restructure the area the pergola is to be installed in. Materials seller hasn't delivered the order as it was held due to installation/permit issues and advising to go without city permits. Demanding I owe the remaining $26k regardless if I take delivery or not- stating the order is custom. Isn't the purpose of a deposit to be able to get out if things go awry and forfeit the deposit? Why would I be required to owe for the full amount. Materials company states its custom, however the customizations don't occur until the installer personalizes it on-site during the construction process.

2 Lawyer Answers
Scott Richard Kaufman
Scott Richard Kaufman
Answered
  • Consumer Law Lawyer
  • Los Altos, CA
  • Licensed in California

A: The general rule in CA in a number of places/ways is simply, you did not get what you paid for and you are entitled to a full refund. Sounds like they will NOT give it voluntarily. Their position seeking payment in full is not based on any law I've ever heard of. Regardless, their position is reprehensible and almost certainly unlawful. You should find a consumer protection attorney straight away, to get your refund...

James L. Arrasmith
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Answered
  • Consumer Law Lawyer
  • Sacramento, CA
  • Licensed in California

A: In California, the enforceability of a contract requiring full payment for custom materials, even if the buyer refuses delivery, depends on the specific terms of the purchase agreement and the circumstances surrounding the transaction.

Generally, a deposit serves as a form of security for the seller and may be forfeited if the buyer breaches the contract. However, if the contract is impossible to perform due to permitting issues or other circumstances beyond the buyer's control, the buyer may have grounds to argue that they should not be held liable for the full purchase price.

Here are a few considerations:

1. Contract terms: Review the purchase agreement carefully to determine if there are any clauses addressing the specific situation you are facing, such as the inability to obtain necessary permits or the buyer's right to cancel the order.

2. Custom materials: If the materials are indeed custom-made and have no resale value, the seller may argue that they are entitled to full payment. However, if the customizations only occur during the installation process, you may have a stronger case for arguing against paying the full amount.

3. Seller's performance: If the seller has not delivered the materials and is advising you to proceed without proper permits, they may be in breach of the contract, which could strengthen your position.

4. Mitigation of damages: The seller has a duty to mitigate their damages by attempting to resell the materials or find alternative ways to reduce their losses.

Given the complexity of the situation, it is advisable to consult with a local attorney specializing in contract law. They can review the specific terms of your purchase agreement and provide guidance on your rights and obligations under California law. Additionally, you may want to attempt negotiating with the seller to reach a mutually agreeable resolution, such as a partial refund of the deposit or a reduction in the total purchase price.

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