BillSmith30087
Junior Member
What is the name of your state (only U.S. law)? South Carolina
Good morning. I am going to try to make this situation simple and I feel that it is.
I manufacture a product for a large corporation (XYZ). A broker (ABC) is the middleman between getting my product to XYZ. We have had this arrangement for four years or so. In the past few years, XYZ has told me that they were very dissatisfied with ABC and even asked me to pursue eliminating the middleman and going straight to XYZ. I did not do that. XYZ found another broker (DEF) and sent them to me. I priced my product higher with DEF than ABC by 5% or so. Since this is the normal amount a broker makes on my product, I thought this would price DEF out of competing. However, DEF got the business. Apparently, ABC had way too high a markup (they had even been asking me for a price decrease).
Now, ABC is telling me they have been "damaged" by me going to use a different broker when they "brought that business to me". ABC says I should have called them to let them know that XYZ was putting it out for bid. They are considering legal action and, more importantly, are not paying their invoices to me for products already provided. These amount to roughly $45,000.
I am a small business and need that money to stay afloat. Three other points:
1. XYZ sent the broker to me and I didn't pursue DEF. Maybe I should have told ABC that I XYZ was "looking". However, I had been told several times in the past that XYZ was under contractual obligation to give ABC thirty days notice as a right of last refusal or something to that effect. Basically, ABC could match prices. Therefore, I thought ABC knew that XYZ was looking.
2. About two years ago, ABC cut me off for a few weeks while they looked at another supplier. They didn't give me notice and I thought I was going to be stuck with inventory. Fortunately, the new supplier was not approved by XYZ and the business came back to me. This makes me think that there was no agreement or understanding other than a week by week purchase order between ABC and me.
3. I am in SC. ABC is in KY. XYZ (where I deliver the product) is in GA.
Where do I go from here? I am thinking I need to send a demand letter either from me or my attorney. Am I going to be filing suit in KY or SC?
I appreciate the advice.
Good morning. I am going to try to make this situation simple and I feel that it is.
I manufacture a product for a large corporation (XYZ). A broker (ABC) is the middleman between getting my product to XYZ. We have had this arrangement for four years or so. In the past few years, XYZ has told me that they were very dissatisfied with ABC and even asked me to pursue eliminating the middleman and going straight to XYZ. I did not do that. XYZ found another broker (DEF) and sent them to me. I priced my product higher with DEF than ABC by 5% or so. Since this is the normal amount a broker makes on my product, I thought this would price DEF out of competing. However, DEF got the business. Apparently, ABC had way too high a markup (they had even been asking me for a price decrease).
Now, ABC is telling me they have been "damaged" by me going to use a different broker when they "brought that business to me". ABC says I should have called them to let them know that XYZ was putting it out for bid. They are considering legal action and, more importantly, are not paying their invoices to me for products already provided. These amount to roughly $45,000.
I am a small business and need that money to stay afloat. Three other points:
1. XYZ sent the broker to me and I didn't pursue DEF. Maybe I should have told ABC that I XYZ was "looking". However, I had been told several times in the past that XYZ was under contractual obligation to give ABC thirty days notice as a right of last refusal or something to that effect. Basically, ABC could match prices. Therefore, I thought ABC knew that XYZ was looking.
2. About two years ago, ABC cut me off for a few weeks while they looked at another supplier. They didn't give me notice and I thought I was going to be stuck with inventory. Fortunately, the new supplier was not approved by XYZ and the business came back to me. This makes me think that there was no agreement or understanding other than a week by week purchase order between ABC and me.
3. I am in SC. ABC is in KY. XYZ (where I deliver the product) is in GA.
Where do I go from here? I am thinking I need to send a demand letter either from me or my attorney. Am I going to be filing suit in KY or SC?
I appreciate the advice.