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Expert James
Expert James, Lawyer
Category: Legal
Satisfied Customers: 12304
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I have a question in regards to a customer purchase order to

Customer Question

i have a question in regards ***** ***** customer purchase order to me and the liability of the inventory related to said purchase order. If a customer gives me a P.O. that requires me to buy inventory and then the customer cancels the purchase order, are they liable for the inventory related.
JA: What state are you in? And have you consulted a local attorney?
Customer: Minnesota
JA: Has anything been officially filed? If so, what?
Customer: I am not sure what you mean by anything being filed?
JA: Anything else you want the lawyer to know before I connect you?
Customer: no
Submitted: 1 month ago.
Category: Legal
Expert:  Expert James replied 1 month ago.

Hello! Thank you for using Just Answer. My name is***** have over 12 years of legal experience.

Your answer is below. When you get your answers, you will be asked to give a rating - 4 or 5 stars are appreciated. This is important because this is how I credit for doing my job. Don't worry, you can still ask related follow-up questions even after you've given a rating. Thank you!

ANSWER: Assuming a contract was formed, under the general common law principles of contract law and damages for breach of a contract between you and the customer, the customer can be held liable for damages that resulted from a breach of the contract. But you also have to do due diligence to mitigate the damages. So you need to try to return what you can return to the company from which you received inventory. The customer may be responsible for making you whole again: paying for shipping costs, paying for restocking costs, any fees or penalties related to returning the items, etc.

Depending on the amount damages, this might end up being filed in small claims court.

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Customer: replied 1 month ago.
Thank you, ***** ***** a contract. All we have is the purchase order from the customer which states they can cancel the order in writing. Would this still qualify for what you mentioned above.
Expert:  Expert James replied 1 month ago.

A contract does not have to be written. If you made an offer, the customer accepted the offer, and there was consideration (in this case you placed the order on the basis of the purchase order), then a contract seems to me to have been formed. Certainly I cannot guarantee any specific outcome, but based on the information I have, it would seem that a contract was formed and they breached the contract.

Of course, if they canceled in writing prior to your placing the order for them, then that is a different story.

Remember that I don't get credit for doing my job if you do not give me a positive rating. Kindly do so by going to the top of this page and clicking on 4 or 5 stars. Thank you!

Customer: replied 1 month ago.
If we take their Purchase Order and acknowledge it, with their Terms and Conditions, then we are accepting said terms as the contract correct? In their terms, it says they can cancel the order in writing, and there is no verbiage on liability of inventory. I am still not comfortable that they are liable for the inventory in the event of cancellation. On top of that I see us acknowledging their purchase order as accepting their terms?
Expert:  Expert James replied 1 month ago.

I never said they were liable for the inventory.

Expert:  Expert James replied 1 month ago.

I said they are liable for damages incurred as a result of their breach of contract. The whole point is, a court would want to put you in the same position or as close to the same position as you were prior to the breach. But the court is not interested in helping you get unjustly enriched by forcing the customer to pay for the inventory if they don't get it and you don't try to mitigate costs and damages.

Expert:  Expert James replied 1 month ago.

Hi, I’m just checking in to see how things are going. I see you have reviewed my answer but I have not received credit for it. Do you need more help? Please respond so that I know what to do next.

Thank you!