Would this constitute commingling of funds? Question about IOLA accounts (IOLA = Interest on Lawyer Account Fund, see iola.org/about-iola). (IOLA is called IOLTA in some states.) Our client has to pay restitution to Walmart. It has taken me months to get payment instructions from Walmart but now we have everything set. (I had to get them to assign a magic reference number.) The easiest way to make the payment is to use a web form and enter a credit card number. That will generate an email receipt. The slightly harder way is to mail in a check and then try to wring a receipt from the office that took three months to issue a reference number. Our client tried to make the payment to the court months ago but the court wouldn't accept payment. The client wanted to get the money out of his bank account asap so he wouldn't spend it, so he wrote a check to our firm. My supervising attorney (SA) put it in his IOLA account. Now what? I think it's okay to briefly transfer the funds from IOLA to operating (business) and then make the credit card payment online. SA disagrees and thinks the only kosher way to do this is to write a check on the IOLA account. I'm going to do it his way but I'm curious whether his concern was a bit over the top. He thinks what I'm proposing would constitute commingling of funds. If you prefer a more general question, consider almost all of the above background for why I'm asking the question. Basically what I'd like to know is, is it okay to transfer a sum out of IOLA into Operating (Business) for five minutes in order to make an online payment using a credit card. (IOLA accounts don't have credit cards associated with them.) What about writing a check on the IOLA account, to make a credit card payment? (To me, that would not really make things more transparent....) It would be great to have an actual reference but a conceptual answer would be helpful too.
indiana Note: The sources below are for client escrow/trust accounts rather than IOLA accounts per se, but IOLA appears to be substantially similar in the sense that they represent funds that the lawyer is not free to spend administratively. In other words, they are trust funds subject to fiduciary duty and not ordinary operating accounts. The Staff of the Indiana Supreme Court Disciplinary Commission considered such a possibility in their opinion TRUST ACCOUNT MANAGEMENT: HANDLING CLIENT AND THIRD PARTY FUNDS. While not stating outright that such commingling is unethical if there is neither intent to defraud nor recklessness, it gives two reasons why it could cause serious trouble: Risks of Lawyer Commingling Client Funds in Lawyer's Personal or Business Account (a) Client funds become available to the lawyer's personal creditors in the event of an attachment of those funds pursuant to proceedings supplementary to execution or otherwise under the Depository Financial Institutions Adverse Claims Act. IC 28-9-1-1, et seq. Even if the identity of the funds is later clarified, the client funds may be frozen for up to ninety (90) days by virtue of the automatic hold provision of IC 28-9-4-2. (b) Upon bankruptcy, dissolution of marriage or death of the lawyer, client funds may become a part of the lawyer's bankruptcy, marital or probate estate. Once again, there may eventually be a separation of interests in the funds, but in the meantime, client funds will be unavailable to their true owners. (c) ...[a scenario involving actual fraud and/or misappropriation] What they are saying is that even if you 100%, really and truly intend to just use your operating account as an &quot;in and out&quot; tool with full intention to devote your entire attention to promptly disburse the funds to their proper destination, that five minutes of commingling could coincide with some sort of legal event that would greatly complicate the payment. For example, you transfer the client's funds from the escrow account into your firm's operating account at Time=0, morally confident that the transfer will be complete at Time=5. Unbeknownst to you, an earthquake occurs at Time=3 in which you are knocked offline and you and your entire firm are killed by falling debris. The contents of your operating account are frozen by your bank and sent to probate. Your client and Walmart hire another attorney to spend the next few months arguing over what your intentions were and why all of that &quot;operating&quot; money needs to be paid over to Walmart. Similar to the above, you are in the middle of the transfer when a court order is served on your bank to freeze your operating account as part of some investigation into something entirely unrelated to your representation of your current client. Now, you are making your case to the court to unfreeze certain funds while Walmart is still waiting and your client is upset that you messed up something that should have been &quot;simple&quot;. A potential solution: The same opinion, in Attachment G, provides: Lawyers are permitted to advance filing fees for their clients out of operating funds, see, Ind. Prof. Cond. R. 1.8(e). In that event, no trust account questions arise from the use of a debit card that draws funds from an operating account. The opinion then seems to indicate that debit cards should not be used, but in this case they are talking about linking cards directly to the escrow account: May lawyers use debit cards to pay client funds for filing fees directly out of trust? The answer has two parts. First, current rules appear to prohibit it. Second, even if the rules were not an impediment, many banks refuse to issue debit cards on trust accounts. The professional rule cited above in the Indiana Rules of Professional Conduct provides that lawyers may &quot;advance court costs and expenses of litigation&quot;. If the payment to Walmart can be considered a court cost or expense, it may be reasonable to pay the amount out of your operating fund and then immediately reimburse it with a client reimbursement from their escrow funds. The pay-then-reimburse model also mitigates the issue mentioned above about intervening causes stopping the transfer. If you have a heart attack right after advancing the funds from your operating account but before filling out the paperwork to reimburse yourself, neither the client nor the other party (Walmart) has been adversely affected.
First of all, there is more than one legal sense in which the term a person's "estate" is used. You are using it in the archaic sense of all of the property owned by a living natural person, but this is not a contemporary use of the term. Normally, the term estate is referred to property that belongs to a dead person that is subject to probate, the property that belongs to a trust, or the property that was transferred to a bankruptcy trustee by operation of law upon the filing of a bankruptcy petition. None of those modern senses of the word apply to this question. You are just asking about the extent to which a particular kind of debt (criminal restitution) can be collected from the person who owes that debt. Your tag also implies that you are particularly interested in New York law. The probate laws of the State of New York are codified in a portion of its statutes known as the EPTL (Estate, Powers and Trusts law), but as noted above, that is not relevant in this case. The criminal law provisions related to restitution, and the general rules applying to debt collection (spread across several of New York's statutes such as the Real Property Actions and Proceedings Law (RPAPL), the New York Penal Law, and the Civil Procedure Laws and Rules (CPLR)) are the laws applicable to your subquestions. 1) Mr. X has spent all the money and is broke. He can't possibly pay the $1 million. When he gets out of jail and (presumably) starts working again, how much of his income can he keep, and how is "excess income" assessed toward the $1 million debt? This involves the liability of Mr. X and not "his estate". If he goes bankrupt this debt would not be discharged if the proper procedural steps are taken. In general, restitution judgments can be enforced by the procedures set forth for collection of a civil judgment and also through the terms of any relevant probation or parole conditions (which would typically allow for incarceration for willful failure to comply with the conditions to the extent that Mr. X is able to do so with minimal due process protections). Civil judgments can be enforced through garnishment of amounts owed to you (such as bank account balances and wages) subject to certain exemptions from creditors (only some of which apply to restitution judgments) and through writs of execution against property owned by you (the process is quite different for tangible personal property v. real property). The general rule is that wages are exempt from creditors up to an amount equal to 30 hours times minimum wage or 75% of the total whichever is greater. There is usually no exemption for income as an independent contractor, businessman or for bank accounts (unless fully traceable to certain exempt assets). Certain kinds of property (there is a long list) are exempt from creditors as well (although certain kinds of assets are exempt as against some but not other creditors). 2) Mr. X has a house worth $1 million with a mortgage of $1 million (a civil liability). I have been told that a criminal judgment takes precedence over a civil liability. Is it true, as my friend asserts, that the $1 million crime victims will get their money before the mortgagee after the house is sold? This is also a claim against Mr. X and not his estate. Your friend was incorrect. A mortgage is a property interest that takes priority over an unsecured debt like a restitution judgment even if that debt may have special priorities in some circumstances. (This assumes that the mortgage is recorded before a "judgment lien" is recorded in the real property records of the county where the house is purchased or is recorded contemporaneously with the purchase of the house. If a judgment lien is recorded and then a mortgage is entered into and recorded later, the judgment lien would have priority.) 3) Mr. X has a house worth $2 million with a $1 million mortgage, and $1 million of equity. Is there anything (e.g. taxes) that will stand in the way of the house being sold, $1 million being paid to reimburse the crime victims, and $1 million to the mortgagee? Put another way, what is the order of reimbursment between victim, mortgagee, and other claimants such as taxes? To grossly oversimplify a complicated process with a variety of exceptions: The highest priority would be any outstanding liens for unpaid property taxes, Then sometimes all or part of a homeowner's association lien, then the first mortgage, then any other other liens junior to the mortgage that are not subject to a homestead exemption of CPLR Section 5206, because the homestead exemption was waived or to which it does not apply by law (e.g. mechanic's liens for work done on the property but not paid for and second mortgages), then the homestead exemption amount (paid to Mr. X) which in New York ranges from $75,000 to $150,000 depending upon the county in question which remains exempt for one year if kept segregated or reinvested in a new home (twice as much if the debtor is married), then judgment liens paid in order of recording which were recorded prior to the restitution judgment lien. The property interest in the house associated with judgment liens or other mortgages recorded after the restitution judgment lien foreclosed upon that burden the property (i.e. junior liens) are erased in a foreclosure, subject to a right of redemption set forth in in RPAPL Section 1352: Sec. 1352. JUDGMENT FORECLOSING RIGHT OF REDEMPTION. Where real property has been sold pursuant to a judgment in an action to foreclose a mortgage, and an action is thereafter brought to foreclose or extinguish a right of redemption in such real property, the judgment, instead of directing a sale of the property, shall fix the right of any person having a right of redemption therein or the right to foreclose a subordinate mortgage or other lien and shall provide that a failure to redeem or commence an action for the foreclosure of such mortgage or other lien within such time shall preclude such person having a right of redemption or the holder of such mortgage or other lien from redeeming such property or foreclosing such mortgage or other lien, and thereafter such person having a right of redemption or the holder of such mortgage or other lien shall be excluded from claiming any title or interest in such property and all title or interests of such person having a right of redemption in, or the right to foreclose a subordinate mortgage or other lien against such property shall thereby be extinguished and terminated. The claims would be paid out of the proceeds of a sheriff's sale net of the costs of sale. If there is money left over after all of these claimants are paid, it would go to the property owner, Mr. X. But, in your scenario with a $1 million mortgage and a $1 million restitution lien and a $2 million value, there would be no excess. If a properly bid sale price is not enough to pay the entire restitution judgment, the shortfall called a "deficiency" remains as a "deficiency judgment" that is still owed by Mr. X. Strictly speaking, the higher priority liens don't get paid from the sales proceeds (except the owner's homestead exemption amount), instead the foreclosure sale buyer takes the property subject to those liens and those senior lienholders have a right to foreclosure in turn if they are paid off. Also, procedurally, the value of the property net of higher priority liens and encumbrances is determined by the highest bid made at a sheriff's sale (with the foreclosing debtor allowed to use the amount of the lien as payment), not on the basis of an appraisal or prolonged sale via a realtor. Often there will be no bidder other than the creditor bringing the foreclosure. APPENDIX: Criminal restitution in New York State is primarily governed by N.Y. Penal Law Section 60.27 which reads as follows: Restitution and reparation In addition to any of the dispositions authorized by this article, the court shall consider restitution or reparation to the victim of the crime and may require restitution or reparation as part of the sentence imposed upon a person convicted of an offense, and after providing the district attorney with an opportunity to be heard in accordance with the provisions of this subdivision, require the defendant to make restitution of the fruits of his or her offense or reparation for the actual out-of-pocket loss caused thereby and, in the case of a violation of section 190.78, 190.79, 190.80, 190.82 or 190.83 of this chapter, any costs or losses incurred due to any adverse action taken against the victim. The district attorney shall where appropriate, advise the court at or before the time of sentencing that the victim seeks restitution or reparation, the extent of injury or economic loss or damage of the victim, and the amount of restitution or reparation sought by the victim in accordance with his or her responsibilities under subdivision two of section 390.50 of the criminal procedure law and article twenty-three of the executive law. The court shall hear and consider the information presented by the district attorney in this regard. In that event, or when the victim impact statement reports that the victim seeks restitution or reparation, the court shall require, unless the interests of justice dictate otherwise, in addition to any of the dispositions authorized by this article that the defendant make restitution of the fruits of the offense and reparation for the actual out-of-pocket loss and, in the case of a violation of section 190.78, 190.79, 190.80, 190.82 or 190.83 of this chapter, any costs or losses incurred due to any adverse action, caused thereby to the victim. In the event that restitution or reparation are not ordered, the court shall clearly state its reasons on the record. Adverse action as used in this subdivision shall mean and include actual loss incurred by the victim, including an amount equal to the value of the time reasonably spent by the victim attempting to remediate the harm incurred by the victim from the offense, and the consequential financial losses from such action. Whenever the court requires restitution or reparation to be made, the court must make a finding as to the dollar amount of the fruits of the offense and the actual out-of-pocket loss to the victim caused by the offense. In making this finding, the court must consider any victim impact statement provided to the court. If the record does not contain sufficient evidence to support such finding or upon request by the defendant, the court must conduct a hearing upon the issue in accordance with the procedure set forth in section 400.30 of the criminal procedure law. The provisions of sections 420.10, 420.20 and 420.30 of the criminal procedure law shall apply in the collection and remission of restitution and reparation. For purposes of the imposition, determination and collection of restitution or reparation, the following definitions shall apply: (a) the term "offense" shall include the offense for which a defendant was convicted, as well as any other offense that is part of the same criminal transaction or that is contained in any other accusatory instrument disposed of by any plea of guilty by the defendant to an offense. (b) the term "victim" shall include the victim of the offense, the representative of a crime victim as defined in subdivision six of section six hundred twenty-one of the executive law, an individual whose identity was assumed or whose personal identifying information was used in violation of section 190.78, 190.79 or 190.80 of this chapter, or any person who has suffered a financial loss as a direct result of the acts of a defendant in violation of section 190.78, 190.79, 190.80, 190.82 or 190.83 of this chapter, a good samaritan as defined in section six hundred twenty-one of the executive law and the office of victim services or other governmental agency that has received an application for or has provided financial assistance or compensation to the victim. A victim shall also mean any owner or lawful producer of a master recording, or a trade association that represents such owner or lawful producer, that has suffered injury as a result of an offense as defined in article two hundred seventy-five of this chapter. (a) Except upon consent of the defendant or as provided in paragraph (b) of this subdivision, or as a condition of probation or conditional discharge as provided in paragraph (g) of subdivision two of section 65.10 of this chapter, the amount of restitution or reparation required by the court shall not exceed fifteen thousand dollars in the case of a conviction for a felony, or ten thousand dollars in the case of a conviction for any offense other than a felony. Notwithstanding the provisions of this subdivision, if an officer of a school district is convicted of violating any section of article one hundred fifty-five of this chapter where the victim of such crime is such officer's school district, the court may require an amount of restitution up to the full amount of the fruits of the offense or reparation up to the full amount of the actual out-of-pocket loss suffered by the victim, provided further that in such case the provisions of paragraph (b) of this subdivision shall not apply. (b) The court in its discretion may impose restitution or reparation in excess of the amounts specified in paragraph (a) of this subdivision, provided however that the amount in excess must be limited to the return of the victim's property, including money, or the equivalent value thereof; and reimbursement for medical expenses actually incurred by the victim prior to sentencing as a result of the offense committed by the defendant. Any payment made as restitution or reparation pursuant to this section shall not limit, preclude or impair any liability for damages in any civil action or proceeding for an amount in excess of such payment. In the event that the court requires restitution or reparation to be made to a person and that person dies prior to the completion of said restitution or reparation, the remaining payments shall be made to the estate of the deceased. The court shall in all cases where restitution or reparation is imposed direct as part of the disposition that the defendant pay a designated surcharge of five percent of the entire amount of a restitution or reparation payment to the official or organization designated pursuant to subdivision eight of section 420.10 of the criminal procedure law. The designated surcharge shall not exceed five percent of the amount actually collected. Upon the filing of an affidavit of the official or organization designated pursuant to subdivision eight of section 420.10 of the criminal procedure law demonstrating that the actual cost of the collection and administration of restitution or reparation in a particular case exceeds five percent of the entire amount of the payment or the amount actually collected, as the case may be, the court shall direct that the defendant pay an additional surcharge of not more than five percent of the entire amount of a restitution or reparation payment to such official or organization, or the actual cost of collection or administration, whichever is less unless, upon application of the defendant, the court determines that imposition of such additional surcharge would cause undue hardship to the defendant, or any other person who is financially supported by the defendant, or would otherwise not be in the interest of justice. Such additional surcharge, when added to the initial five percent surcharge, shall not exceed ten percent of the amount actually collected. If the offense of which a person is convicted is a class A, class B, class C, or class D felony involving the sale of a controlled substance, as defined in article two hundred twenty of this chapter, and no other victim who is a person is seeking restitution in the case, the term "victim" as used in this section, in addition to its ordinary meaning, shall mean any law enforcement agency of the state of New York or of any subdivision thereof which has expended funds in the purchase of any controlled substance from such person or his agent as part of the investigation leading to such conviction. Any restitution which may be required to be made to a law enforcement agency pursuant to this section shall be limited to the amount of funds expended in the actual purchase of such controlled substance by such law enforcement agency, less the amount of any funds which have been or will be recovered from any other source, and shall not include a designated surcharge pursuant to subdivision eight of this section. Any law enforcement agency seeking restitution pursuant to this section shall file with the court and the district attorney an affidavit stating that funds expended in the actual purchase of a controlled substance for which restitution is being sought have not been and will not be recovered from any other source or in any other civil or criminal proceeding. Any law enforcement agency receiving restitution pursuant to this section shall promptly transmit to the commissioner of the division of criminal justice services a report stating the dollar amount of the restitution received. If the offense of which a person is convicted is defined in section 150.10, 150.15 or 150.20 of this chapter, and no other victim who is a person is seeking restitution in the case, the term "victim" as used in this section, in addition to its ordinary meaning, shall mean any municipality or volunteer fire company which has expended funds or will expend funds for the purpose of restoration, rehabilitation or clean-up of the site of the arson. Any restitution which may be required to be made to a municipality or volunteer fire company pursuant to this section shall be limited to the amount of funds reasonably expended or to be expended for the purpose of restoration, rehabilitation or cleanup of the site of the arson, less the amount of any funds which have been or will be recovered from any other source, and shall not include a designated surcharge pursuant to subdivision eight of this section. Any municipality or volunteer fire company seeking restitution pursuant to this section shall file with the court, district attorney and defense counsel an affidavit stating that the funds reasonably expended or to be expended for which restitution is being sought have not been and will not be recovered from any other source or in any other civil or criminal proceeding. For the purposes of this subdivision, "volunteer fire company" means a fire company as defined in paragraph a of subdivision two of section one hundred of the general municipal law. Notwithstanding any other provision of this section to the contrary, when a person is convicted of harming an animal trained to aid a person with a disability in the second degree as defined in section 195.11 of this chapter, or harming an animal trained to aid a person with a disability in the first degree as defined in section 195.12 of this chapter, the court, in addition to any other sentence, shall order the payment of restitution to the person with a disability who was aided by such animal. If the offense of which a person is convicted is defined in section 155.25, 155.30, 155.35, 155.40 or 155.42 of this chapter, and the property taken is timber, the court may upon conviction, in addition to any other sentence, direct the defendant to pay the rightful owner of such timber an amount equal to treble the stumpage value of the timber stolen as defined in section 71-0703 of the environmental conservation law and for any permanent and substantial damage caused to the land or the improvements thereon as a result of such violation. Such reparations shall be of such kind, nature and extent as will reasonably restore the lands affected by the violation to their condition immediately before the violation and may be made by physical restoration of such lands and/or by the assessment of monetary payment to make such restoration. If the offense of which a person is convicted is defined in section 240.50, subdivision one or two of section 240.55, section 240.60, section 240.61, section 240.62 or section 240.63 of this chapter, and no other victim who is a person is seeking restitution in the case, the term "victim" as used in this subdivision, in addition to the ordinary meaning, shall mean any school, municipality, fire district, fire company, fire corporation, ambulance association, ambulance corporation, or other legal or public entity engaged in providing emergency services which has expended funds for the purpose of responding to a false report of an incident or false bomb as defined in section 240.50, subdivision one or two of section 240.55, section 240.60, section 240.61, section 240.62, or section 240.63 of this chapter. Any restitution which may be required to be made to a victim pursuant to this subdivision shall be limited to the amount of funds reasonably expended for the purpose of responding to such false report of incident or false bomb, less the amount of any funds which have been or will be recovered from any other source and shall not include a designated surcharge pursuant to subdivision eight of this section. Any victim seeking restitution pursuant to this subdivision shall file with the court, district attorney and defense counsel an affidavit stating that the funds reasonably expended for which restitution is being sought have not been and will not be recovered from any other source or in any other civil or criminal proceeding, except as provided for by section 3-112 of the general obligations law. Where a transfer of probation has occurred pursuant to section 410.80 of the criminal procedure law and the probationer is subject to a restitution condition, the department of probation in the county in which the order of restitution was imposed shall notify the appropriate district attorney. Upon notification by the department of probation, such district attorney shall file a certified copy of the judgment with the clerk of the county in the receiving jurisdiction for purposes of establishing a first lien and to permit institution of civil proceedings pursuant to the provisions of subdivision six of section 420.10 of the criminal procedure law.
Contracts contain an implicit term that obligations will be carried out in a reasonable time While the situation is unusual and we obviously don't have the specific terms of the agreement, it would appear that the vendor agreed to contribute to half the cost of the roof repair and your sister was obliged to contribute the other half and arrange for the roof to be repaired. Implicit in this is that she would do this within a reasonable time. Your sister does not have the right to keep the money in limbo indefinitely. It's open to argument whether a year is a reasonable time or not. Similarly, if your sister is in breach of the agreement, the vendor would probably only be entitled to damages for what they have lost; they would not normally be entitled to terminate the contract. Their damages might be assessed as the difference between what their share costs now compared to what it would have cost a year ago - this may be nothing or a lot depending on how prices have changed - and interest lost on the balance that should have been returned to them.
No employer has ever the right to withhold your pay check for work you have done. It is strictly illegal. Even if they had 100% evidence that you caused damage and were responsible for that damage, they still can't withhold your pay. They have to pay you, and then they can try to take you to court. The reason for this law is exactly cases like yours, where people try to avoid payment. If the "powerful attorney" tells you that you are not getting paid, then that "powerful attorney" is making a big mistake, because any lawyer would love to take your case to court and see the judge cutting the "powerful attorney" down to size. If you don't want a lawyer now, then you can write a letter by registered mail telling them that you worked for them, how much the payment due is, that they are legally required to make that payment, and that you will take them to court if they are not paying. If there is a conflict between law and a "powerful attorney", the law wins, and the law is on your side.
You have the legal (contractual) obligation to pay the amount that you owe for your meal. The restaurant can refuse to accept a particular kind of payment, such as check, cash, credit cards (generally or brand-specific), various cash-transfer programs, foreign currency, bitcoin or ridiculous numbers of pennies. There is no requirement that they do today what they did yesterday. If you have in your possession only a Discover card, and if they are unwilling to accept service barter as payment (washing dishes is classical), then you would have a debt to the restaurant which you must pay in a reasonable time, using an acceptable medium (such as cash, unless they don't accept cash). They cannot make it impossible or highly burdensome for you to discharge your obligation (e.g. they cannot demand Krugerrands or Mongolian ᠲᠥᠭᠦᠷᠢᠭ as the alternative payment, unless you are in Mongolia). You were given advance notice of this possibility of non-acceptance, yet you willfully proffered a card that you knew that they were not likely to accept a second time. Your hands were not clean, and if this had gone to court, you could not expect mercy from the court on the grounds that you were surprised that they didn't accept your card.
You need, at least, to let the person receive 2 reminders which have to name a reasonable period (after the first exceeds, you can send the second) and if the last deadline exceeds, you have the possibility of escalating further. Although often repeated, this is not correct which makes most of your argument moot. By German law (specifically § 286 BGB) these are the exact conditions for a default of payments: (1)If the obligor, following a warning notice from the obligee that is made after performance is due, fails to perform, he is in default as a result of the warning notice. Bringing an action for performance and serving a demand for payment in summary debt proceedings for recovery of debt have the same effect as a warning notice. (2)There is no need for a warning notice if a period of time according to the calendar has been specified, performance must be preceded by an event and a reasonable period of time for performance has been specified in such a way that it can be calculated, starting from the event, according to the calendar, the obligor seriously and definitively refuses performance, for special reasons, weighing the interests of both parties, the immediate commencement of default is justified. (3)The obligor of a claim for payment is in default at the latest if he does not perform within thirty days after the due date and receipt of an invoice or equivalent statement of payment; this applies to an obligor who is a consumer only if these consequences are specifically referred to in the invoice or statement of payment. If the time at which the invoice or payment statement is received by the obligor is uncertain, an obligor who is not a consumer is in default at the latest thirty days after the due date and receipt of the consideration. (4)The obligor is not in default for as long as performance is not made as the result of a circumstance for which he is not responsible. Depending on what was contractually agreed on the default happened even before the first warning. For example that is the case if a specific payment due date was agreed to. Even if a warning would be required it is only one and you can see that no requirements on the specific wording or form on that warning is given. I don't know how you assume an "official reminder" should look like. According to the law a specific and explicit demand to fulfill an obligation is enough. Also, the warning does not need to contain a specific date. If it doesn't the default is effective immediately.
No, this is not an acknowledgement of guilt or liability. It offers a &quot;discount&quot; some sort of reduction in price. This could be an offer of settlement without admission of liability, or even just advertising for repeat business (unlikely as that may seem). Without the rest of the communication, there is no way to tell. Unless there are specific admissions, this statement alone is not likely to have much significance in such a case. Edit: There is still not enough context to tell exactly what the sender of this communication wanted to accomplish with the offer of the discount, but since the OP now says &quot;the party does not take the responsibility&quot; this is not an admission of guilt, whatever else it is. It sounds like some sort of backdoor form of settlement offer without admission, but that is far from clear to me. My original answer is not significantly hanged here.
Preface and Caveats The question doesn't specify where this happened. I am providing an outline of the way that most U.S. states would handle this situation, if the fats are as they are much more likely to be and not as claimed in the question probably due to a misunderstanding of the underlying transaction. I identify areas where state laws most often vary and don't describe those areas of the law in detail since that is impossible without knowing where this happens. This is a matter of state law and varies from state to state, although most U.S. states are quite similar until you get to the fine details. Atypical language in the contract between the contractor and the client could also lead to a different conclusion. I don't know how this would be resolved in a non-U.S. jurisdiction. Background: The Structure Of A Typical Construction Loan Financed Construction Project In business and contractual disputes you can only understand the answer if you understand the underlying business transaction, which the question itself doesn't spell out very fully. The fact pattern identified in the question is so unusual that I strongly suspect that there is a misunderstanding of the facts, or an inadvertent misstatement in the language used in the question due to sloppy writing that flows from not appreciating the importance of some key facts. The transaction was almost surely structures more or less as follows (for background, I'm presenting a more general very of this kind of transaction rather than the simple one with no subcontractors or material suppliers involved, because this context helps someone understand why the laws are written the way that they are written.) Usually, the client owns real property, takes out a construction loan from a bank secured by the real estate, and hires a general contractor. The client will usually make some down payment to the general contractor who will take care of paying the subcontractors and material suppliers, and will pay the balance of the amount due to the general contractor through proceeds of the construction loan disbursed by the bank which are drawn as the work is done and payment is earned. Typically, each drawn cycle, which is often monthly for a smaller project and weekly, biweekly or semimonthly in a larger project, materials suppliers and subcontractors submit invoices and lien waivers to the general contractor based upon the work done. If the work is complete, a complete lien waiver is submitted, if he work in only partially finished, a partial lien waiver is submitted. The general contractor substantively reviews the invoices based upon a physical review of the construction site and a review of the subcontract. If there are problems it is rejected and must be resubmitted by the material supplier or subcontractor. If it is approved, the general contractor attaches that invoice as a supporting document to a draw request for the draw cycle summarizing all validly submitted invoices from material suppliers, subcontractors and itself, and also attaching a partial lien waiver from the general contractor. Then, the general contractor submits that draw request to a bank officer handling the construction loan as an agent of the property owner-client, and also a client representative for approval. The bank officer and client representative make a much less probing review of the draw request, looking only for obvious irregularities or suspicious amounts, and if everything is in order, they approve the request. Then, the bank write a check in the draw amount approved to the general contractor. The general contractor then disburses the invoiced amounts to the materials materials suppliers and subcontractors and pays itself the amounts that it has earned. Sometimes, however, the general contractor gets a valid invoice from a material supplier or subcontractor, and receives funds from the client in the form of a downpayment or a loan draw, but doesn't pay the subcontractor or material supplier with those funds. Also, sometimes, the general contractor does work that it is entitled to be paid for or incurs an obligation to a material supplier or subcontractor, but the client doesn't pay or the bank doesn't disburse the funds requested even though the request is valid. When a general contractor, material supplier or subcontractor doesn't get paid for work that is actually done at a particular piece of real estate, the law gives the firm that wasn't paid for its work on that particular piece of real estate what is called a mechanic's lien encumbering that piece of real estate. The details of how a firm with a mechanic's lien gives notice to the world of its rights, the priorities of lien's vis-a-vis each other, and the way that mechanic's liens are enforced varies significantly from state to state. But typically the notice must be given very promptly and not long after notice of non-payment is given, a lawsuit to foreclose on the real estate encumbered by the lien is commenced. An unpaid material supplier or subcontractor, in addition to its lien rights, can also sue the general contractor for breach of contract, and sometimes also for misappropriation of disbursements from the client or the bank. An unpaid general contractor, in addition to its lien rights, can also sue the owner of the property for breach of contract. The Facts In The Question and Analysis The first paragraph of the question tells us what went wrong. The client paid an employee of the general contractor (probably a project manager) instead of the firm the employee worked for (basically embezzling the money by deceiving the client into thinking that the employee was authorized to receive a payment to the employee's firm on its behalf when that wasn't the case), and the firm of the employee who was paid now wants to get paid. This happens and lawsuits usually follows when it does. But exactly what happens next depends upon the facts in the next to paragraphs. The next two paragraphs of the question, however, are probably confused and incorrect. The next two paragraphs say: Two weeks later, the client received a letter from the contractor's lender asking the client for money owed to the contractor, saying that if it was not paid, the client could be double charged. Does the client owe the contractor's lender? What probably actually happened is that the finance office of the contractor submitted a draw request to the bank officer in charge of the client's construction loan with the bank, and also gave a notice of the draw request to the client. The client tells the bank officer not to approve the draw request because the client has already paid the draw request directly to the employee of the contractor (probably the project manager) without the knowledge of the firm the employee worked for. What Happens Next If The Facts Are As I Believe Them To Be? When this happens, the finance officer at the contractor firm talks to the client figures out what happens and then talks to the employee to whom the payment was made. If the employee promptly turns over the funds the the contractor firm, the finance officers at the contractor firm scolds the employee for screwing up the system and the client for making a payment to the wrong person and there is no harm, no foul, and the matter is over. But if the employee who took the client's money doesn't turn over the money which the client can prove to the contractor firm that he paid to the employee, several things are likely to happen. Non-Lawsuit Actions: The client will direct the bank not to pay the draw request. The employee who took the money from the client is fired (no big deal, he was probably long gone). The contractor firm and/or the client will often, but not always, report to the police that the employee embezzled the funds from the client, and if the police find it credible, will issue an arrest warrant. The main reason not to do so is that the facts are uncertain enough that the police and prosecutor don't want to touch it (e.g. the client paid the employee in cash and didn't get a receipt, or the employee when asked says that the payment was made but was a &quot;tip&quot; or was payment for something unrelated), or the client and/or the contractor firm don't want to harm their reputations by making public the fact that there was a theft on this job. Three lawsuits could be brought, although, in practice, these might be consolidated as claims against different parties and cross-claims between defendants, in a lawsuit brought by the contractor, or in some other configuration. The contractor firm sues the employee who took the money for converting money from a client intended for it (probably both as a tort and as a breach of fiduciary duty by an agent of the construction firm). The contractor firm sues the client for breach of contract. The question is about the liability of the client in this second lawsuit. The client might also bring a counterclaim against the contractor for negligent supervision of its employee if the employee did indeed abscond with the money and the facts support that counterclaim. If the client prevailed on that counterclaim, the judgment on the counterclaim for negligent supervision (e.g. if the contractor knew that the employee had a history of doing things like this and didn't warn the client) would be setoff against the breach of contract judgment, rather than being a defense to the breach of contract claim. The client sues the employee for fraud, conversion or theft. What Are The Rights Of The Parties In These Lawsuits? In the second lawsuit, the client has breached the contract. The contract said to pay the firm, the client paid someone else, and so the obligation under the contract was not satisfied. The disputes in the lawsuit between the contracting firm and the client will be over whether the employee had apparent authority to accept the funds as an agent of he contracting firm, over whether the payment that the client says was made to the employee was made at all, and over the purpose of the payment if a payment was made to the employee but the employee claims that it was a &quot;tip&quot; or a payment for something else (e.g. the employee also had a catering side hustle and the employee says it was for catering services). The issue of whether the client made the payment at all may be hard to prove if the payment was made in cash and the employee didn't provide a receipt and will come down to the credibility of the client and employee's testimony at trial. if the payment was made with a check or credit card, bank records will make it an open and shut case on that issue that will probably not be disputed at trial. If the facts reveal that the employee had apparent authority to accept the funds from the client for the contractor firm and that the payment was for work on the project and not something else, then the the payment made by the client to the employee satisfies the client's duty under the contract even if the employee wasn't actually authorized to receive the funds for the contractor firm. So, the client wins and the contractor firm's sole remedy is to sue its employee for misappropriating the client's funds. On the the other hand, if the employee did not have apparent authority to accept the funds from the client, or the payment was for something other than work on the project, or the client fails to prove that the payment was ever made, then the client owes the money to the contracting firm and must pay the contracting firm for the amount due (plus interest, litigation costs and possibly attorneys' fees depending on the terms of the contract). The client may pay that obligation out of separate funds of the client's own, or may authorize a the bank officer to make a draw on the construction loan to pay the amount owed. The construction loan bank of the client wouldn't sue the client or demand payment from the client for the amount that should have been paid to the contractor firm but was instead paid to the employee. It didn't pay money to someone it shouldn't have paid it to unless the client authorized the bank to do so. And, the bank won't pay the contractor without the client/borrower's say so. If the client authorized a draw payment from the construction loan to the employee rather than the contractor firm, the client still owes the bank for what it paid to the employee at the direction of the client (in addition to all other draws on the project), although the client may have a suit against the bank officer for negligence in administering the loan by failing to flag that the payee was wrong (which might lose but isn't a sure loss). The amount owed to the contractor firm proceeds under the analysis set forth above. What If The Facts Are Right? If, improbably, the facts as stating in the question are actually what happened, the client will owe or not owe the contractor money under the same analysis as above. But the client will not have liability to any company that the contractor got a loan from (which would not encumber the client's real estate), since the client has no contractual relationship with the contractor's lender. Post-Script On Double Payment Prevention Laws The question hinges on the unfairness of the client having to possibly pay twice for the same construction work. In some situations, where the general contractor firm is at fault for causing the double payment to happen, the law protects the client from double payment, even though those laws don't apply here. I explain why these laws don't apply below. Basically, the client has to eat the double payment when the double payment occurs because the client screwed up though no fault of the general contractor and the general contractor doesn't benefit from the double payment. Some states have laws designed to prevent property owners, often only residential property owners having work performed on their own residences, from having to double pay for work done in some circumstances. But these laws usually only apply when the client pays the general contractor firm as the client is supposed to, satisfying his contractual obligation, and the general contractor doesn't pay the subcontractor, causing the subcontractor to sue the general contractor for breach of contract and the owner to enforce the subcontractor's mechanic's lien. In those situations, the double payment prevention law eliminates the subcontractor's mechanic's lien rights when the client pays the general contractor in full, and the subcontractor is left only with a lawsuit against the general contractor who didn't pass on the client's or the client's bank's payment to the general contractor for the subcontractor's share of work to the subcontractor. In this case, the double payment laws usually wouldn't apply because the legal issue here is whether the client paid the contractor, or was deceived by the employee into paying someone other than the contractor in an act of conversion/embezzlement/fraud.