More details to this question:
A friend asked for a short term loan with a very profitable rate of return ... I told him I could probably do that but just have to look at things. All of my money was in a bank account in his name. I requested the rest of my money out of the account and said I was still committed to the five K and to take the five k out of that account and give me the rest. After a personal altercation I told him that I could not continue with the loan and was told that the money was committed and that I couldn't just take back a loan. Because there were no terms to this agreement I wrote up a loan agreement for three months at 20% interest per month and if he did not agree to these elements than there would be no loan and the money would need to be returned within three days. He still refuses to give me the money back and still refuses to accept the terms of agreement. He also claims that it wasn't a short term offer and was an offer to be repaid after he sold a property which he has been trying to sell for over a year which I would not agree to. Trying to find out what I can do
1 ANSWER
A contract is an agreement, nothing more or less. Its existence and terms depend on the intent of the parties. Most contracts do not have to be in writing to be enforceable. If you had an agreement to loan him the 5k, you can't unilaterally change the agreement after he took the money. However, if the parties did not intend for there to be an agreement until they had signed a written contract, then there was none until then, and he would be required to return your money. In this situation, it is likely that he would take the position that you had an agreement, while you would take the position that you didn't intend for there to be any agreement until you had a signed writing. It is possible (based on the few facts you've articulated) that a Court could come down either way, depending on how credible you each are, whether there are any disinterested witnesses and what they say, and whether there is any documentary evidence to support either side.
Incidentally, the written contract you proposed is illegal, as 20% per month interest (240% annually) goes well beyond the maximum interest rate allowed by law. I don't know the maximum interest rate allowed under California law, but in New York the maximum interest rate you can charge an individual is 16% annually, while the maximum interest rate you can charge a corporation is 24% annually. California might be different, but I'm confident that it isn't different enough that you can charge 240% per year.
Answered on Jul 30th, 2013 at 2:36 PM