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How Would A Judge Rule On This?
Two years ago I loaned money to a friend with agreed upon terms ($55K,13%,4 yrs). He even drew up the promissory note specifying that for my quarter percent interest in the business, I was to receive a quarter percentage of the net profits.
His business is very profitable (he has purchased a new car, 2 or 3 homes and plasma TVs) but I have never seen any of the proceeds. His payment on the funds loaned comes once a month but nothing more. A while ago I e-mailed him about my share of the business and he told me he was just breaking even. He then said I could look at his books if I were so inclined. I wrote back that I wanted to see his tax returns instead being he uses the interest he pays me as a write off. Oddly, I received a short note making mention of California usury laws pertaining to loans over 10%. From his last email, I am concluding that he will not pay me anything being the note we both agreed to and signed contains a high interest rate and if we have to go to court over this then the whole note will be considered invalid. My questions are these: If two people agree to a loan over 10%, is it really not legal? And by not paying me a percentage of the business, is this a breach of contract? How would a judge rule and what should I do now? Thank you. |
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First I highly recommend you consult an attorney. But you should check out this site:
http://caag.state.ca.us/consumers/general/usury.htm I think your friend screwed himself by tying the loan to his business. The 10% maximum applies to loans "primarily for personal, family or household purposes". By providing a promissory note that indicated the loan was for a business, different rules apply. This could go either way. And you really need to consult an attorney. |
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