What should I do if I hired an ad agency to do work for $11,000.00 and they took my money but never produced the promotional pieces for my tradeshow?
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What should I do if I hired an ad agency to do work for $11,000.00 and they took my money but never produced the promotional pieces for my tradeshow?
This was damaging to my business because after they resigned it left me no time to produce from someone else and so I went to the show without any promo. This was very bad to my sales staff. This company never returned my money. Such a scam. I want my money back and more. I lost potential sales of 100k plus.
Asked on December 13, 2015 under Business Law, Massachusetts
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
You can certainly sue them for the $11,000 they took without doing the work, on a variety of grounds: breach of contract; unjust enrichment; possibly fraud and even theft.
As for potential sales: that is more problematic. First, you'd have to *prove* you would have gotten those sales--just having the "potential" to get them means nothing, since may things are "potential"-ly possible. So unless you can back up, such as with evidence of sales obtained in the past from similar shows when you had promo materials, you're not going to get anywhere with this.
Second, even if you can show lost sales, you can recover *profit* not gross sales. That's because since you didn't actually get the sale, you didn't incur the merchandise/production/fulfillment/staff, etc. costs that went with it, and the law doesn't let you recover for costs not incurred. For example, I used to work in the toy business. A toy we would sell to the retailer for $5.00 cost us $2.50 to make. We would also incur around $0.25 per unit in shipping to get it to them, and would attibute around another $0.25 of staff time and other overhead per unit, in terms of getting, processing, fulfilling, then getting paid on the sale. So the actual profit was around $2.00 on a $5.00 item, or a 40% margin. If we'd sued for lost sales, we'd be able to claim for $40k on $100k of sales. So even if you can prove lost sales, you can only claim for your profit.
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