When dealing with big numbers, be sure the contract is clear. That’s the message a judge delivered last week to two Santa Monica small businesses who wound up in small claims court over a disputed referral fee.
In April 2001, Sample Digital Inc. got Jetcast.com a job. They set up the dot.com with a $100,000 deal to supply Enron Corp. broadband content for 10 years. In return, they expected 10 percent of the gross value of the deal.
When the check didn’t come through, they sued Jetcast.com for $5,000, the maximum small claims amount. But they didn’t have a contract to back up their claim.
Instead, representatives from Sample Digital showed the court copies of e-mails where they said it was clear the two companies had agreed to the deal.
Before Jetcast.com could respond to Sample Digital’s case, Judge Pro Tem Douglas Schiffer speculated on the defense’s strategy.
“Good old Enron,” the judge said to laughter in the court. “Wild guess: Is your argument going to be that you never got any money from Enron?”
But John Williams, owner of Jetcast.com, said he’d gotten the $100,000 check. Instead, he argued the commission was to be based on adjusted gross profit, which, he claimed, could not be determined until the 10-year contract had run its course.
“That content has licensing and encoding costs,” Williams told the court. “At the very most, we’re going to end up making $5,000. The idea of paying Sample Digital $5,000 is ludicrous.”
Williams also showed copies of e-mails where he claimed the two businesses agreed to 10 percent of the gross profit, not the gross value. Each side claimed their e-mails were more recent, though both admitted no traditional contract existed.
Judge Schiffer awarded Sample Digital $2,000, plus court costs, saying they clearly performed some work for Jetcast.com.
“It’s an ambiguous deal is what it is,” Schiffer said. “Next time you guys need a better agreement.”
Originally published in the Santa Monica Daily Press print edition on January 20, 2003. Read the original PDF.