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Dwayne B.
Dwayne B., Attorney
Category: Legal
Satisfied Customers: 33264
Experience:  Began practicing law in 1992
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Can a clothing manufacturer back out of a purchase order if

This answer was rated:

Can a clothing manufacturer back out of a purchase order if they haven't accepted payment?

JD 1992 :

Hello, and thank you for contacting Just Answer. I am an expert here and I look forward to assisting you today.

JD 1992 :

Can you provide a few more facts to put this into context?

Customer:

sur - a known clothing manufacturer and distributor has been doing business with a clothing retailer for some time. in august, retailer places a purchase order for good tyo be delivered on or about mid december. Some time in-between, they have a dispute, and manufacturer decides they no longer wish to do business with retailer. Manufacturer did NOT take any money with regards XXXXX XXXXX August purchase order

Customer:

manufacturer informs retailer they won't be fulfilling the order and will not be taking any new orders from retailer

Customer:

retailer goes bonkers claiming lost profits over the nobn-delivered goods

JD 1992 :

Payment not being accepted wouldn't be an issue in a case like this allowing the clothing manufacturer to avoid fulfilling a contract.

Customer:

right, so the manufacturer can cancel the purchase order at will, correct?

JD 1992 :

No, not necessarily. If the purchase order is a contract, and it sounds like it is from these basic facts, then the manufacturer would be in breach of that contract if they failed to deliver the promised goods.

JD 1992 :

The exception to that would be if the retailer was supposed to pay for the goods and did not timely do so.

Customer:

they can't cancel the contract months ahead of the due date if no money has changed hands. say, money was due at time of delivery - but something happens during the months in between that makes manufacturer question the retailers business ethics

JD 1992 :

It depends on what happened but as a general rule, no they can't cancel. There is something called "anticipatory breach" which, as an example, would be if the clothes were to be delivered and paid for in December and the retailer let it slip that they were going to file bankruptcy and close the store in January.

Customer:

ok

JD 1992 :

But the manufacturer can't just cancel the contract without being in breach. If they do then they can be sued and asset any defense they have but they stand a chance of losing the case if the defense isn't compelling and able to be proved.

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