Legal advice on the binding effect of a U.S. service agreement and a dispute over unpaid fees

A U.S. company received a demand for unpaid service fees from a service provider. We advised on the legal binding effect of the relevant agreements, the scope of the company's payment obligation, and strategies for responding to the dispute.

The main issues were whether an agreement signed without internal approval bound the company, and whether the company was also obligated to pay under a renewal agreement entered into by a separate entity. A further question was whether, even if contractual liability were denied, an obligation to return unjust enrichment could arise from the company's actual use of the services.

We analyzed the binding effect of the original agreement under the doctrine of apparent authority in U.S. agency law. We also compared the parties and the agency authority under the renewal agreement, along with changes in the scope of services and the fee terms, to assess whether a separate payment obligation had arisen.

We further analyzed potential liability under unjust enrichment principles and defects in the notice given through the invoices, and proposed strategies for negotiating the amount to be paid and for responding to the dispute, distinguishing the legal liability under each agreement.

We advised that the payment obligation under the original agreement was likely to be upheld, but that the renewal agreement, entered into without separate consent, was likely to be found not binding.

On that basis, we developed a strategy for negotiating the final payment amount while avoiding the risk of acknowledging debts the company did not owe.

Related U.S. practices: Contracts & Business Transactions, Business & Commercial Disputes