Sally's Situation

Sally requests that you help her on an immediate problem she has with another business, Gravy Train, LLC. Her usual supplier was out the office, and she was referred to a different supplier to fill her order. Sally indicated that she faxed her usual pre-printed order form to the new supplier for $17,642.54. Within two days, the goods were delivered with the supplier's pre-printed order form and invoice from the new supplier for $20,642.54.Sally then began to receive calls from the new supplier indicating that payment was overdue and that she now owes an additional $3,000 per the supplier's invoice that accompanied the goods. The invoice states that a $3,000 per 24 hours default nonpayment surcharge is assessed for late payments. She instantly retrieved their invoice and read the terms on the back of the invoice and realized that the supplier's form did, in fact, have payment terms that demanded payment for delivery of goods to be paid within 12 hours of delivery of the goods. Sally noted that her form had a different term of payment that gave her 30 days net payment. The buyer left her a message that he was going to file suit immediately for her breach of the terms of his purchase order.

Your Assignment

Sally asks that you advise her if the supplier is trying to rip her off or if this is this simply an error in whose terms apply. Here is a copy of theGeneral Contract Clauses for Acceptance of Goods (PDF)that she is talking about.

General Contract Clauses: Acceptance of Goods1.Acceptance of Goods.1.1Buyer shall inspect the Goods [upon/within [NUMBER] days of] receipt ("InspectionPeriod")oftheGoodsand either accept or reject such Goods. Buyer may reject such Goods if:(a)theydonotconformtothe[make/modelnumber/UPC/SKU/[OTHERPRODUCTIDENTIFIER]]listedinthe applicablePurchaseOrder,oronvisualinspection,Buyerreasonablydeterminestheydonotconformtothe warrantiessetforthinthisAgreement("NonconformingGoods").Wherethecontextrequires,Nonconforming Goods are deemed to be Goods for purposes of this Agreement.(b)whencountedtogetherwithallotherGoodshavingthesame[make/modelnumber/UPC/SKU/[OTHER PRODUCTIDENTIFIER]]andreceivedbyBuyerunderthesamePurchaseOrder,theyareinexcessofthe quantities of such Goodsordered under that Purchase Order ("Excess Goods").1.2Buyer will be deemed to have accepted the Goods unless it notifies Seller in writing of any Nonconforming Goods orExcessGoodsduringtheInspectionPeriodandfurnishessuchwrittenevidenceorotherdocumentationas [reasonably] required by Seller. If Buyer timely notifies Seller of any Nonconforming Goods or Excess Goods, Seller shall determine, in its sole discretion, whether the Goods are Nonconforming Goods or Excess Goods. If Seller determines that the Goods are Nonconforming Goods or Excess Goods, it shall, in its sole discretion:(a)if such Goods are Nonconforming Goods, (i) replace such Nonconforming Goods with conforming Goods, or (ii) refund the Price for such Nonconforming Goods, together with all shipping and handling expenses incurred by Buyer

Contract Clauses: Acceptance of Goods connection therewith; or(b)ifsuchGoodsareExcessGoods,refundthePriceforsuchExcessGoods,togetherwithallshippingand handling expenses incurred by Buyer in connection therewith.1.3Buyer shall ship, at [its/Seller's] expense [and risk of loss], the Nonconforming Goods or Excess Goods to Seller's facility located at [LOCATION]. If Seller exercises its option to replace Nonconforming Goods, Seller shall, after receiving Buyer's shipment of Nonconforming Goods, ship toBuyer, at [Seller's/Buyer's] expense [and risk of loss], the replaced Goods to [the Delivery Point/a location designated by Seller/[OTHER LOCATION]].1.4Buyer acknowledges and agrees that the remedies set forth in Section1.2and Section 1.3are Buyer's exclusive remedies for the delivery of Nonconforming Goods or Excess Goods[, subject to Buyer'srightsunder[SECTION]with respect to any Nonconforming Goods for which Buyer has accepted delivery under this Section 1].

She believes she is in the right because she was the one ordering the supplies using her form and that she never signed any final contracts or reached an agreement with those exorbitant payment terms. What advice can you provide?Battle of the Forms Explained (Using a Few Short Words) (theContractsGuy)(Links to an external site.)

is a helpful resource. ThisChecklist of Items to Consideris another good reference for this assignment.