Hello XXXXXXXX
No they do not have the right. This question falls under the area of contract law known as mistake. In contract law there are two types of mistake - unilateral mistake and mutual mistake.
A mutual mistake occurs when the parties to a contract are both mistaken but about different things. As such, there is no consensus between the parties, and really no agreement was ever entered into between them. Hence the contract is void. This is not the case in your question.
Instead, what is involved in your question is a unilateral mistake. A unilateral mistake is where only one party to a contract is mistaken as to the terms or the subject-matter of the contract. This can also include the price or the value of the goods sold. The courts will uphold such a contract unless it is determined that the non-mistaken party was aware of the mistake and tried to take advantage of the mistake. So in your case, unless your company was aware that the first company was undercharging you, then the contract at its original price is valid, and the first company will not be able to recover the addition $40,000.
I hope this answers your question.
Thomas
Hello XXXXXXXX,
I still think you should be o.k. What you have with this other company is an installment contract with an open price term.
From what I understand, the other company ships you roofing materials periodically, and you don't agree on a price for those materials beforehand. Instead, you receive the materials, and then when you receive the invoice, you pay what is stated on the invoice. This is perfectly fine and is a type of contract. In this case, when no price is agreed to beforehand, the price of the materials would be a reasonable price for the materials at the time of delivery. What is a reasonable price? It would depend on what was paid for prior shipments of the materials and what the market price for similar materials is.
For instance if you have a course of dealings with the other company in which you paid $1,000 for each shipment, and that is the market price of the goods, they cannot suddenly request $10,000 for the same goods on the next shipment, if that price was not separately agreed to.
More importantly however, you indicated that you paid for the materials as requested by their invoice, and they claim a year later that they made a mistake. However, their acceptance of your payment a year earlier, without rejecting the payment, is evidence that they considered your payment at the time to be reasonable.
Most states have enacted something called the Uniform Commercial Code (UCC). Under § 2-709 of the UCC, a seller has "commercially reasonably time" to recover a price that a buyer fails to pay. In your case, you have a strong case that it is not commercially reasonable for them to ask for additional payment a year after the goods were delivered. I assume that all during that year, they continued to send you goods and you paid for them. The fact that they continued to have commercial dealings with you is additional evidence that at no time did they consider in breach.
So, if they do decide to take you to court I think you have a couple of very good defenses. Now, if you want to prevent them from taking you to court, you of course could try to negotiate something so that you don't have to pay the $40,000, but something much less. And in negotiating something you could point out the defenses you have above.
But again if they do take you to court, I don't think they will win.
I hope this helps. Good luck.
Lawyer
Seventeen years experience as New York, New Jersey lawyer, and publisher of online legal newspaper