Tuition Centre ownership change & deposit ($) responsibility

[JonC]

Reserved

[sushi88]

Have you tried calling CASE for help?

[Jennifer]

I thought it would be buy over with all existing assets and liabilities. Liabilities should include deposits received from clients.


Go complain at CASE first.

[CMF]

Original contract for deposit is between student & centre, hence deposit etc is with Old Centre.


However, there possibly is an assignment clause in that contract to state that Old Centre is able to assign (deposit included) the contract (usually without consent of students), which means New Centre takes over responsibility for deposit.

Depending on terms of agreement between Old Centre & New Centre, it could possibly be New Centre was to have been assigned all student’s contracts, but parties may not have catered for situation where students may not wish to continue with New Centre, and hence the immediate refund of deposit.

Students unfortunately caught in between. Technically on the face of it, recourse is against Old Centre. However, if official proper notice of assignment of contract has been given to students, then recourse would be against New Centre.

You may wish to raise issue with CASE, as students are caught in a limbo now, where you would not be getting what you paid for (i.e. reputable senior teachers have left etc), but yet not be given sufficient notice of change of ownership (to give notice to leave centre to get refund of deposit), and hence seem to be now caught in between the Centres’ dispute (i.e. the terms of sale of business between them seem to be rather lacking, e.g. did not seem to have addressed teachers leaving, students wanting to leave as a consequence etc).

[ChiefKiasu]

That’s why I’m never in favour of tuition or enrichment services taking "deposits". It makes little sense especially when most practice forward payments. Since parents are already paying for services rendered in the future, why on earth do the services want additional "protection" against non-payment?


You should collect the money from the old centre, since they are the ones who were supposed to be holding onto the money in the first place. If need be, sue them in the subordinate courts.

[hquek]

Parents should band together to seek recourse. Easier to go with one voice than individual voices also. Also, the threat of contacting the friendly reporters at Sinming/Wanbao may provide some scare value.

[JonC]

@CMF


When new owner signed the "Assignment" with "Students’ Contract" (deposit implied) included but claim that he/she isn’t aware, does that constitute that he/she is not responsible for the deposit since the word "deposit" is not explicitly spelt out in the "Assignment"?

The term of "proper notification" (in the form of official letter, I presumed) of "Assignment" to students, does issuing of letter 1 week / last lesson under old owner consider proper notification since it is known that 1 month of termination is required? The new owner too issues a letter few days after the old owner’s letter while still within the last month under old owner, is this also "proper notification"?


@Chief

You have a very good point about pre-paid thingy. Just like the pre-paid SIM card, like it or not you have to consume before dumping it, so that’s already a 1 month security and there is no need for another.

[hquek]

Hi JonC,


I’m not a lawyer nor trained in that field. Not sure if you can try this tack:

Parents paid the deposit to the centre and not to the owners. The contract was between centre and parent. Centre change hands but the new owner - in paying money to the old owner for the centre, may have taken on the assets and liabilities (rights and obligations) of the centre. How is it even fathomable that the new owner buy over the centre that excludes deposits paid by parents? It was part and parcel of the deal right? In accounting terms, the old owner should have recorded such monies collected as a future liability (i.e. when the student withdraw, it is an obligation the centre has to pay). The new owner cannot shirk his responsibility.

Therefore you should just ask your money back from the new owner. Anything between new and old owners should be settled between themselves…students/parents should not have to get involved. That’s ridiculous that you even have to be shunted around.

Wishing you parents the very best of luck!

[CMF]

JonC:

@CMF


When new owner signed the \"Assignment\" with \"Students' Contract\" (deposit implied) included but claim that he/she isn't aware, does that constitute that he/she is not responsible for the deposit since the word \"deposit\" is not explicitly spelt out in the \"Assignment\"?

The term of \"proper notification\" (in the form of official letter, I presumed) of \"Assignment\" to students, does issuing of letter 1 week / last lesson under old owner consider proper notification since it is known that 1 month of termination is required? The new owner too issues a letter few days after the old owner's letter while still within the last month under old owner, is this also \"proper notification\"?

When the New Centre signed the Assignment document for the Students' Contracts, it basically stepped into the shoes of the Old Centre, the onus (responsibility) is on new owner to know what contractual terms it assumed (as stated in the Students' Contracts), which includes the terms of the Deposit.

Not anybody else's problem, if new owner not aware of liabilities it assumed! Assignment document will merely reference the Students' Contracts and other contracts etc that were assigned. Due diligence into terms of each contract assigned in the Assignment, is the new owner's responsibility.

In the absence of explicit notification period stated in the Students' Contracts on the part of the Old/New Owner, an argument of implied period required (since deposit refund requires 1 month), and bad faith can be raised, especially even at this juncture there is a dispute as to whom is responsible for its refund.