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Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24870
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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Company A sells product to Company B who uses the product to

Customer Question

Company A sells product to Company B who uses the product to manufacture and sells to company C.

Company A has a UCC Financial statement over all inventory, receivables and cash.

Company A provided faulty product (300 Door Slabs) that company B manufactured and sold to company C. After company C installed the finished product, the product started to delaminate. Company A acknowledged the error and agreed to replaced all 300 door stabs to be re-manufactured by company B and except all back charges by company C.

This situation caused company C to pull all open purchase orders from company B ($50K) and short paid the open balance by $11K for backcharges to re-install the 300 defected door slabs.

This forced company B to go out of business and liquidate the company.

The issue is, company B has an outstanding balance of $12K with company A who has decided not to accept the $11K backcharge as promised. Company B shows only owing company A $1K. Due to the UCC filing, they are looking to enforce it.

How does one go about disputing the amount owed and closing the UCC filing. (They have agreed to reduce the balance to $6K but that is still not the correct amount.
Submitted: 4 years ago.
Category: Business Law
Expert:  Law Pro replied 4 years ago.
Was A's promise in writing as to the $11k backcharge?
Customer: replied 4 years ago.

No, it was verbal but he has changed his story to his finance department. it was verbal between the manufacturing rep and the two owners of company B.

Expert:  Law Pro replied 4 years ago.
The problem then is - that its a modification of the original contract.

Do you have a copy of the original contract? If so, what does it say about modifications - do they have to be in writing?
Customer: replied 4 years ago.

No Contract. If I supply a payment of $1K to company A along with the chargeBack of $11K and write final payment. Even if they deposit the check, I will need them to release the UCC filing which they will refuse to do. So the question is where is the protection for company B?

Expert:  Law Pro replied 4 years ago.
You can try to resolve the matter with them by your "accord and satisfaction" approach.

However, if after that they still won't agree to release the UCC filing - then you have no alternative but to file a Statement of Claim against their UCC filing.

Here is a link to such a form for Virgina:

http://www.scc.virginia.gov/publicforms/495/ucc-5.pdf