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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 36753
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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I have a customer who gave me a P. O. and a deposit of $14K

Customer Question

I have a customer who gave me a P. O. and a deposit of $14K to make some furniture for his product line of end tables. My estimated lead time was about 90 days. This customer sent me samples from which I quoted. Afterward this customer proceeded to ask me to make substantial changes to the design. Basically his sample had numerous design shortcomings that he was accepting from his previous supplier as the standard for me to quote. Now he was quitting the previous supplier and having me to make it for him. So far there have been may changes which interrupted the 90 days schedule and now it is way past 120 days. All changes have been surprises and unplanned and after the fact and quite numerous causing a series of further delays.
Results of these many changes has been large delay of schedule and possible changes of pricing. Customer has not allowed enough time to accomplish all this. Additionally the customer now wants to cancel the order and get ALL his monies back because of these delays and a never ending dissatisfaction of the resulting product which in now at best in a condition of continuous revisions. Certainly we have bent over backwards to take care of this customer and he has not realized that his many changes has put us into an time wasting continuous stop and start and stop again schedule.
I could subtract from the deposit those costs so far and send him the rest of his deposit if he would accept any responsibility for his part. He says send me my money or I will sue for full amount. He is in Florida and I am in California.
The last item is the furniture now built which he doesn't want. I broker outsourced this work to be done and this outsource company wants to be paid. If not he may chose to liquidate this inventory. Selling these end tables to another wholesaler. The buyers of this liquidation will probably ask for more furniture and it may inadvertently result in a new competitor for the first customer unfortunately. I had only hoped to just be a good service to the original customer here, but it is a "catch 22".
QUESTION: Best response to the threat of suit from this first customer.
Submitted: 10 months ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 10 months ago.

Thank you for your question. Please permit me to assist you with your concerns.

This is a bit of a different situation that actually helps you more than the customer. Provided that what he were asking was unique and custom-made, such contracts generally CANNOT be canceled unless your agreement so designated. The reason is because such work is by necessity unique and not fungible, which would place you as a manufacturer in a weaker condition if you end up having to refund all of the money. As the best response, point out that unless you had a 'satisfaction guaranteed' clause in your contract, you are no contractual or state obligation to cancel terms. You are willing to send back the funds that were not used up via his deposit,but if he pushes the point, you will suit for full contract value on basis of bad faith breach since he failed to permit you to execute the terms as they were initially provided. That, by itself, should be sufficient to avoid suit and point out that in this instance you are in a strong position from a legal perspective.

Good luck.

Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 36753
Experience: Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
Dimitry K., Esq. and 9 other Legal Specialists are ready to help you
Customer: replied 9 months ago.

Dimitry


 


Thank you for you input to me. I am glad to hear you say that I am in a strong position from a legal perspective. To my surprise this customer is now threatening law suit over this matter with a demand letter.


I understand that the jurisdiction of this case would be in California. I must be sure to confirm that he would be required to come to California to pursue a suit like this. Can we be sure this is the situation for the location of the court. If he must come to California then his expenses will probably be too high to follow through with these threats and allow for a situation more convenient to come to agreements over this.


 


1. Please confirm that jurisdiction should be my state CA and not his state FL.


2. What else should I do to avoid more prolonged conflict....and hopefully keep legal costs down.


3. Any other things I should pay attention to here.


 


This is his letter to me and my local Attorney here:


 


TO: XXXXX XXXXX Morrison, Jr.
Morrison Law
River Village Plaza
5256 S. Mission Rd., Ste` 1010
Bonsall, CA 92003
chmorríson@morrison­law.net

Re: Return of Payment from USA Dog Crates, Inc. d/b/a DenHaús

Invoice No. 82331 dated April 8, 2013

Dear Mr. Morrison:

This firm has the pleasure of representing the interests of USA Dog Crates, Inc. d/b/a DenHaus in
the above matter. I have prepared this letter in the hopes that it Will not be necessary to pursue litigation
against your client, Brothers Milling, LLC, for the sums paid by my client for substandard and non-confortning work.

Enclosed herewith please find Invoice No. 82331, dated April 8, 2013, for the fabrication of the listed pet products. The total sum to be paid for the completed Work is reflected as $24,250. In a showing
of good faith, my clients provided to Brothers Milling approximately $14,500 of this sum based upon your client’s representations that it could fabricate high quality pet furniture in accordance with my
elìent’s specifications and directions. When my client received the ñrst exemplary model from Brothers
Milling, it was in extremely poor condition, but your client explained that this was because it had been damaged during shipping. Based upon these representations, my client agreed to allow your client
another chance to provide conforming goods. Shortly thereafter, my client received two (2) additional pieces of fabricated pet furniture and, much to its dismay, both were in the same poor condition and of the
same poor quality as the exemplar. It became exceedingly clear to my client at that point that your client was incapable of delivering high-quality goods in conformance with Invoice No. 82331.

My client has demanded a return of its $14,500 from your client, but those demands have gone unheeded. As a last effort to avoid litigation, my client proposes the following:

l. Within seven (7) days from the date of this letter, Brothers Milling, LLC will return, via cashier’s check made payable to “USA Dog Crates, Inc.” and sent to my office at the
above address, Ten Thousand Dollars ($10,000.00) ofthe sums paid by my client for the items listed in Invoice No. 82331;

2. For its time and materials, Brothers Milling, LLC shall be entitled to retain the remainder
of the sums paid by my client less the $10,000 return; and


3. My client agrees that, upon receipt and conñrmation of $10,000 from Brothers Milling, LLC, this matter Will be settled in full, and my client Will take no further action related to this matter.

As indicated above, my must receive the full $10,000 cashier’s check Within seven (7) days of the date of this letter. If it is not received by that time, this offer shall be deemed rejected and shall be
of no further force or effect, and my client will be forced to pursue alternate means of recovering all sums paid to Brothers Milling, LLC.


PLEASE GOVERN YOURSELF ACCORDINGLY.


Signed etc

Expert:  Dimitry K., Esq. replied 9 months ago.

Thank you for your follow-up, Ferdinand.

To answer your questions directly:


1. Please confirm that jurisdiction should be my state CA and not his state FL.

It could be either. If the agreement that you both signed had the choice of law as California, then technically CA would govern. However he could potentially use Florida's long arm statute to claim that as you conducted business in Florida, you are likewise bound under their jurisdiction, and as that is where the proposed injury took place, Florida can likewise be seen as a valid locale.

 

2. What else should I do to avoid more prolonged conflict....and hopefully keep legal costs down.

That very much depends on you. If you want to keep legal fees down, then the cheapest option is to either pay what is owed by their claim in exchange for this hold harmless agreement, or sue them first in California for the balance due.

 

3. Any other things I should pay attention to here.

Do not admit to quality of the items. Also state that if they kept the items, they accepted delivery and therefore accepted the terms of the full agreement.

 

Good luck.

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