Request for quote gone wrong

[rfqgonewrong]

What is the name of your state? Texas

Several months ago I asked a small electronics fabricating company to provide me with a quote to produce 400 small electronics devices so that I could sell them to my customers. During the process the company hired a third party to design the circuit board which is the central part of the product. This third party contacted me for details surrounding the function of the product which I provided. At the next meeting with the electronics firm (that I placed the rfq with) they presented me with a bill for the charges incurred by them from the third party circuit board designer and asked that I pay for the third party services. They informed me that I had until the 10th of the next month to pay. I was very surprised to be presented with a bill before any prices had been quoted for series production. I never agreed to pay anything whatsoever in the quoting process. BUT since I knew that the quoting process would not move forward if I said that I would not pay this $700 bill, I said that I would pay it later and I hoped that the quote for series production would be acceptable to avoid conflict. I figured that if the quote for series production was acceptable then I would pay the third party design fee and cost it out to the project.

About a month after the meeting I received the quote for series production for the 400 pieces. The quote was too high for me to consider moving forward with the project. I made it clear that I would not be ordering the parts due to their higher than expected per-piece cost. The electronics firm asked that I pay the $700 bill for the board designer's fees. I tried to explain that I did not agree to pay fees in seeking a quote but they felt that since I said that I would pay the bill at the last meeting that the bill was due and payable despite the fact that we were not going to produce the devices.

The company has sent past due notices with threats to turn the bill over to a collection agency and has since done so when I informed them that I had no intention to pay a bill for services I did not request. The catch of course is that I did say that I would pay it at a later date when I was presented (surprised is a better word) with the bill at our last meeting. I only said that I would pay it to keep the deal alive until a quote for production was presented.

I have asked for quotes from many companies. I have never been presented with a bill prior to receiving a quote and I have been told that it is highly irregular to receive such a bill prior to receiving a quote for production. Am I liable for this bill?What is the name of your state?

[weenor]

Quite frankly this is too complicated for this forum. Your liability will depend on the terms of any written contract with this co. that cannot be reviewed. If there is no written contract, your liability will be predicated on the provisions of the Uniform Commercial Code adopted by your state. Contact a local attorney for a consultation. With that said, for $700.00 it may be well worth it to either pay it or negotiate with the co. for a lower "settlement" amount.

[rfqgonewrong]

There was never a contract, oral or written. The only thing I ever agreed to is that the electronics firm provided a quote for series production.

$700 is not a large amount of money but now they have sent it to a collection agency which will have an impact on my less than one year old corporation if it sticks. I think the company is trying to make me pay on a debt that I didn't agree to.

[JETX]

Originally Posted by weenor

Quite frankly this is too complicated for this forum.

Not really... this is very simple.

And contrary to the OP's claim that there was no contract... there was.

Originally Posted by rfqgonewrong

BUT since I knew that the quoting process would not move forward if I said that I would not pay this $700 bill, I said that I would pay it later

And there was YOUR mistake. Though you had no obligation to pay the bill previously, the minute that you agreed to do so... THAT is a contract.

and I hoped that the quote for series production would be acceptable to avoid conflict.

They 'hired' outside services, you agreed to pay for them. The fact that YOU did so without knowing the full price is YOUR error.

I figured that if the quote for series production was acceptable then I would pay the third party design fee and cost it out to the project.

Simply, you 'figured' wrong.

The catch of course is that I did say that I would pay it at a later date when I was presented (surprised is a better word) with the bill at our last meeting. I only said that I would pay it to keep the deal alive until a quote for production was presented.

Yep... and that is a pretty big 'catch'.

Am I liable for this bill?

Based solely on the contents of your post.... yes.

[rfqgonewrong]

Well that's not what I wanted to hear.

Even if I had rejected the bill upon being presented with it would I not be liable for it just the same as you state I am now? The electronics firm felt I was liable as soon as they incurred the 2nd party cost. It just seems like the situation would be exactly the same if I rejected the bill immediately. And I never agreed to pay any third party, ever. If they told me that I would have to pay fees before a quote was presented I would have said no and cancelled the rfq.

In the future should I accompany all RFQ's with a contract stating that my company will incur no costs in the production of a quote? Yeah, that will build trust in a hurry.

[JETX]

Originally Posted by rfqgonewrong

Even if I had rejected the bill upon being presented with it would I not be liable for it just the same as you state I am now?

Nope... prior to your agreeing to pay the bill... you had no obligation to do so. The obligation arose when you agreed to pay it.

And I never agreed to pay any third party, ever.

Now your just playing 'word games'. No one said you agreed to pay the third party directly. However, your own post says that you agreed to pay THEM for the costs they incurred on your behalf.
"since I knew that the quoting process would not move forward if I said that I would not pay this $700 bill, I said that I would pay it later"

If they told me that I would have to pay fees before a quote was presented I would have said no and cancelled the rfq.

It was incumbent on YOU to ask them if there was any costs to be incurred in the quote process. They were simply doing what YOU asked them to do (provide a quote for a custom product).

In the future should I accompany all RFQ's with a contract stating that my company will incur no costs in the production of a quote? Yeah, that will build trust in a hurry.

You should do whatever you need to do to protect yourself.... including asking if there is any cost in asking another company to do something for you... and then not agreeing to pay the cost only to later refuse.

Lets see how this SHOULD have happened. You ask them to provide a quote. They go out on their own and incur costs in preparing their quote. They inform you of the costs and demand payment. You should have IMMEDIATELY refused to pay THEIR costs. Instead you AGREED to pay it. That was where you made YOUR mistake.
Pay them the money that you agreed to... or suffer the consequences of the negative credit hit and possible litigation. Pretty simple.

[rfqgonewrong]

Thank You, JETX for your input. I do appreciate it.

I'll sit down with the other party and let them know that the only chance to get a deal at all hinged upon my "acceptance" of their bill for the third party design fees. If I had walked upon the presentation of the bill then the game would have been over. I'll try to use this point to negotiate a lower payment and a signed agreement to ensure that there won't be and negative credit reporting.