Company C wishes to cancel unfilled deliveries. Company A would
suffer serious loss of anticipated revenue and profits if
deliveries are canceled at this time. Company A would also lose
significant sums invested in material procurement as well as
indirect expenses.
How enforceable is the "non-cancelable" aspect of this Agreement
if company C wishes to cancel the remaining deliveries? What
options does company A have?
Rick C <gnuarm.del...@gmail.com> wrote:
Company C wishes to cancel unfilled deliveries. Company A would
suffer serious loss of anticipated revenue and profits if
deliveries are canceled at this time. Company A would also lose
significant sums invested in material procurement as well as
indirect expenses.
How enforceable is the "non-cancelable" aspect of this AgreementThere are some situations in which the "non-cancelable" clause would
if company C wishes to cancel the remaining deliveries? What
options does company A have?
not apply. Since no time frame for delivery was included, the law
will mandate that deliveries must be made within a "reasonable
time." In that situation it would be up to a judge or jury (and
possibly what they had to eat that morning) to determine whether
cancelation of the contract was justifiable.
If there was another breach that would cause Company C not to get the
benefit if its bargain (meaning essentially to get what it was
supposed to get under the contract), Company C would have the right
to rescind (cancel) the contract.
I don't know off the top of my head if the "subordinate" clause would
allow the contract between C and J to supersede the terms of the
other contract. But since all three were parties to the other
contract, probably not. Allowing that would breach the implied
covenant of good faith and fair dealing.
Based what the information provided, C is unlikely to have the right
to cancel future deliveries. A situation that makes it unpleasant or difficult to fulfill your duties under a contract does not excuse
them. And someone certainly cannot cancel their obligations under a
contract because "I changed my mind" or "I have a very strong desire
to do so."
Is it reasonable to consider it a sale when the PO is accepted
rather than when goods are shipped?
Seems there is conflicting language in the Terms and Conditions. The lawyer is also looking at the Terms and Conditions indicated in the PO. I think it comes down to language that refers to "orders" and other language that refers to "sales" being non-cancelable.
Is it reasonable to consider it a sale when the PO is accepted rather than when goods are shipped?
A PO (Purchase Order) is, in effect, an offer to buy. When the
seller notifies the buyer that it has accepted the PO, then there
is a contract and it can only be canceled or modified by mutual
consent (or as specified in the terms of the PO).
Note that the acceptance MUST be communicated to the buyer. The
buyer can rescind the offer up to the moment that the seller
communicates that acceptance.
On 1/28/2022 4:32 PM, Rick C wrote:cancelable.
Seems there is conflicting language in the Terms and Conditions. The lawyer is also looking at the Terms and Conditions indicated in the PO. I think it comes down to language that refers to "orders" and other language that refers to "sales" being non-
Is it reasonable to consider it a sale when the PO is accepted rather than when goods are shipped?A PO (Purchase Order) is, in effect, an offer to buy. When the seller notifies the buyer that it has accepted the PO, then there is a contract
and it can only be canceled or modified by mutual consent (or as
specified in the terms of the PO).
Note that the acceptance MUST be communicated to the buyer. The buyer
can rescind the offer up to the moment that the seller communicates that acceptance.
There's a whole complicated set of law about offer and acceptance, but
it comes down to this (usually)
1. An offer is effective when received by the offerer
2. An acceptance is effective when sent by the acceptor. (That is, if it
is sent by US mail, it is effective when dropped into a US Mail
colletion box or the equivalent at a Post Office.)
3. A revocation is effective when received.
So it is possible for the acceptance and revocation to "cross in the
mail", but if the acceptancw was sent before the revocation is received,
the acceptance is effective and there is a contract.
This could even apply to e-mail, although the time period is typically
much shorter.
It seems it is key as to the definition of "sales". If an
accepted purchase order is a "sale", then it can not be canceled.
If it is not a "sale" until the goods are shipped, then it would
seem the latter paragraph regarding "costs and expenses" is the
relevant section. In that case, it becomes important to designate
what are "costs and expenses directly related to the canceled
order".
Seems there is conflicting language in the Terms and Conditions. The lawyer is also looking at the Terms and Conditions indicated in the PO. I think it comes down to language that refers to "orders" and other language that refers to "sales" being non-cancelable.
Is it reasonable to consider it a sale when the PO is accepted rather than when goods are shipped?
It seems it is key as to the definition of "sales". If an accepted purchase order is a "sale", then it can not be canceled. If it is not a "sale" until the goods are shipped, then it would seem the latter paragraph regarding "costs and expenses" isthe relevant section. In that case, it becomes important to designate what are "costs and expenses directly related to the canceled order".
Barry Gold <bgold@labcats.org> wrote:
A PO (Purchase Order) is, in effect, an offer to buy. When the
seller notifies the buyer that it has accepted the PO, then there
is a contract and it can only be canceled or modified by mutual
consent (or as specified in the terms of the PO).
I'll agree with that.
Note that the acceptance MUST be communicated to the buyer. The
buyer can rescind the offer up to the moment that the seller
communicates that acceptance.
That is normally the case, but not necessarily. Depending on the
provisions of the purchase order, it could be a unilateral contract
that would be formed, not by communication of acceptance, but by
performance.
For example, in the days before on-line purchases with email
confirmations, you might send a check and a purchase order to, say,
Sears, to ask them to send you a case of toilet paper. Sears could
drop a note in the mail to tell you they accepted your offer. But in practice they would simply ship the toilet paper. That was an offer
of a unilateral contract, and the contract was formed by shipping
what was ordered. They were not required to accept the order or send
the purchased goods. But once they did, the contract was formed.
On 1/30/2022 1:07 AM, Stuart O. Bronstein wrote:
Barry Gold <bgold@labcats.org> wrote:
A PO (Purchase Order) is, in effect, an offer to buy. When the
seller notifies the buyer that it has accepted the PO, then there
is a contract and it can only be canceled or modified by mutual
consent (or as specified in the terms of the PO).
I'll agree with that.
Note that the acceptance MUST be communicated to the buyer. The
buyer can rescind the offer up to the moment that the seller
communicates that acceptance.
That is normally the case, but not necessarily. Depending on the
provisions of the purchase order, it could be a unilateral contract
that would be formed, not by communication of acceptance, but by
performance.
For example, in the days before on-line purchases with email
confirmations, you might send a check and a purchase order to, say,
Sears, to ask them to send you a case of toilet paper. Sears could
drop a note in the mail to tell you they accepted your offer. But in
practice they would simply ship the toilet paper. That was an offer
of a unilateral contract, and the contract was formed by shipping
what was ordered. They were not required to accept the order or send
the purchased goods. But once they did, the contract was formed.
Wouldn't shipping the toilet paper basically be a way of communicating acceptance, even if it's not a written document saying "we accept"? We
use non-verbal communications all the time. I don't really see much difference in the following:
1) I send a PO and payment on Jan 1st and it's received by the seller on
Jan 8th.
2) Seller sends me a letter on Jan 8th, saying "I accept. Shipment will
be in two weeks."
3) Two weeks later, on Jan 22nd, it ships.
and
1) I send a PO and payment on Jan 1st and it's received by the seller on
Jan 8th.
2) (skipped)
3) Seller sends me the item on Jan 22nd.
When they actually ship the item, *that* could be taken as the point of communication from the seller that it was accepted without needing the
step 2 in between (although if there was that two week delay in
shipping, I could cancel any time in that three week period instead of
only having a week. And the "three weeks to cancel" assumes I am able to
get the cancellation to them immediately with no mail delays, of course.)
Note that the acceptance MUST be communicated to the buyer. The
buyer can rescind the offer up to the moment that the seller
communicates that acceptance.
That is normally the case, but not necessarily. Depending on the
provisions of the purchase order, it could be a unilateral
contract that would be formed, not by communication of
acceptance, but by performance.
For example, in the days before on-line purchases with email
confirmations, you might send a check and a purchase order to,
say, Sears, to ask them to send you a case of toilet paper.
Sears could drop a note in the mail to tell you they accepted
your offer. But in practice they would simply ship the toilet
paper. That was an offer of a unilateral contract, and the
contract was formed by shipping what was ordered. They were not
required to accept the order or send the purchased goods. But
once they did, the contract was formed.
Wouldn't shipping the toilet paper basically be a way of
communicating acceptance, even if it's not a written document
saying "we accept"? We use non-verbal communications all the time.
I don't really see much difference in the following:
1) I send a PO and payment on Jan 1st and it's received by the
seller on Jan 8th.
2) Seller sends me a letter on Jan 8th, saying "I accept. Shipment
will be in two weeks."
3) Two weeks later, on Jan 22nd, it ships.
and
1) I send a PO and payment on Jan 1st and it's received by the
seller on Jan 8th.
2) (skipped)
3) Seller sends me the item on Jan 22nd.
When they actually ship the item, *that* could be taken as the
point of communication from the seller that it was accepted
without needing the step 2 in between (although if there was that
two week delay in shipping, I could cancel any time in that three
week period instead of only having a week. And the "three weeks to
cancel" assumes I am able to get the cancellation to them
immediately with no mail delays, of course.)
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