The Law Office of Lynnette Ariathurai A Professional Corporation

Non-profit organization in middle of contract dispute with city

When a business forms a legal contract with another entity, the business will more than likely have the right to demand payment as long as it fulfills its part of the bargain. Whether the business is a for-profit or non-profit enterprise, it should still be able to enforce a legally-valid contract in California or anywhere else. This would also include contracts with government entities. However, one non-profit company is currently in a contract dispute with a city government for non-payment for services rendered.

The non-profit organization had been hired by the city in 2010 to design a campaign to address the problem of underage drinking. The organization teamed up with a high school youth group which created the materials, while the organization gave the youth group guidance in coordinating the effort. The organization trained the youth group in social media marketing and messaging, according to the non-profit's executive director. Now he is claiming that the city has failed to pay the agreed-upon amount of $200,000 for implementing the project.

The executive director claims that the city owes his non-profit organization $80,000; however, the city says it will only pay $72,000. The city government is refusing to pay $8,000 for expenses for a variety of reasons. First, the city claims that some of the expenses were disallowed in accordance with the contract. Also, the city says that the organization failed to submit monthly invoices along with documentation for expenses.

However, the executive director refuses to compromise in the contract dispute. He is still demanding to be paid the full amount agreed to in the contract with the city. In cases such as this one, it may not be possible to come to an agreement through mediation. This means litigation could be required to settle the issue. In contract disputes in California and elsewhere, many times it comes down to how one legally interprets a contract and a judge will ultimately need to make the final decision on how a specific agreement should be interpreted under the law.

Source: Hawaii News Now, "EXCLUSIVE: Drug-Free Coalition in contract dispute with city," Jim Mendoza, Dec. 13, 2012

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