A buyer, who had previously ordered phones from a Company, recently ordered a batch of 2,500 phones from it at the price of 40/unit, for a total of 100,000, plus a fixed 500 shipping charge, for delivery to "CIF Miami." At the Buyer's request, the phones have the Buyer's logo printed on the back. The Company had some delays in fulfilling the order, and now Buyer refuses to pay more than 30/unit, claiming that the phones not only arrived late but also appeared to be damaged by moisture from the ship's hull. The Buyer returned them to the Company (at Buyer's expense) within a day of taking delivery. The Buyer is also demanding payment from the Company as compensation as it says that it had to pay to a customer who bought the Company's phone, and threatened a lawsuit after the phone caused him to crash his car, which he had argued was the result of the phone's interference with the car's GPS system.
[...] Otherwise we will have to do something. Regarding the delay, it is specified in the convention that the seller must deliver the goods if fixed by the contract (article 33). As we have signed the contract we engaged ourselves to deliver the goods in time. Even if the boat has a problem or if any other circumstances delayed the shipment our buyer is not responsible for it, we are. That is why we have to take full responsibility for this breach of contract. [...]
[...] Conclusion In conclusion the company needs to be extremly carefull with these situation. I think that regardign all possible decision to take the firm should first try to speak Annette and calm down. But the firm also needs to prevent identical futur events. In order to do so it should begin with including in each contracts or conventions a first clause for the decision process. It should say something like: In no cases an employee is authorized to take business decisions for contract exeding $ without cnsulting the upper management”. [...]
[...] Eunice knows this is unacceptable to you and wants you to identify the terms that should she should seek to include in such a clause. Meanwhile, Eunice has been talking to a lawyer to help with these matters, and the lawyer has sent Company a proposed retainer agreement that contains the following clause concerning billing”: Billing: “Lawyer charges $375/hour for all litigation-related work. In order to minimize Client's legal expenses, a junior associate in Lawyer's office, billed at $200/hour, will perform all work which he or she is competent to perform. Expenses will be billed at actual cost. [...]
[...] All of this is done in order to strengthen our position on this market. But the issue is that we do not really know how the law is made for corporation structure, as well as for taxation. Meanwhile we the firm is negotiating with a Chinese manufacturer regarding our brand new “CoolPhone”. But we are afraid that the Chinese copy our product and then sell it for a cheap price, making ours obsolete. We need to study more the contract. [...]
[...] I may agree to compensate for a smaller amount. For example we could negotiate a discount of or per unit, and go up to if we had to take responsibility for the damages too. There is also the insurance company with which we have a contract for the delivery. As the issue occurred on our side it will pay for the damages. Anyway we also need to keep the customer mainly satisfied if we want him to eventually come back. [...]
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