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  1. #1
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    Question about UCC and Contract Law

    What is the name of your state (only U.S. law)? Indiana, New York

    We sell wholesale merchandise sourced from major retailers.

    A buyer approached us wanting toys. We agree on a truckload price, and forewarned the buyer truckloads tend to come mixed with additional categories.

    Buyer agreed.

    Buyer was invoiced. They reviewed and signed invoice which clearly states all sales are final.

    Buyer receives product. Accepts delivery but claims he cannot see toys on any pallet.

    Salesman agrees that, if irrefutable evidence no toys were present was given, he'd send out additional pallets.

    Instead of providing evidence, buyer hires attorney and notifies us of their intent to sue under the Uniform Commercial Code (specific section pertaining to nonconforming products).

    My question: Would the signed disclosure and lack of evidence fend off this obvious attempt at trying to 'get over on us'?

    I do not feel it's out of line to ask for evidence no toys existed - especially since one can simply offload all toys and claim none were received.

    Thank you in advance, forum goers.


  2. #2
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    Quote Originally Posted by Phantasmo View Post
    What is the name of your state (only U.S. law)? Indiana, New York

    We sell wholesale merchandise sourced from major retailers.

    A buyer approached us wanting toys. We agree on a truckload price, and forewarned the buyer truckloads tend to come mixed with additional categories.

    Buyer agreed.

    Buyer was invoiced. They reviewed and signed invoice which clearly states all sales are final.

    Buyer receives product. Accepts delivery but claims he cannot see toys on any pallet.

    Salesman agrees that, if irrefutable evidence no toys were present was given, he'd send out additional pallets.

    Instead of providing evidence, buyer hires attorney and notifies us of their intent to sue under the Uniform Commercial Code (specific section pertaining to nonconforming products).

    My question: Would the signed disclosure and lack of evidence fend off this obvious attempt at trying to 'get over on us'?

    I do not feel it's out of line to ask for evidence no toys existed - especially since one can simply offload all toys and claim none were received.

    Thank you in advance, forum goers.
    The buyer can refuse to accept nonconforming goods. I find it odd you do not have a record of the goods sent.


  3. #3
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    We purchase direct from retailers. Not every purchase is manifested.

    These are, more often than not, sight unseen purchases.

    Once that purchase is made by us, it is final. Which is why we have a disclosure signed stating the same when we sell it.

    Companies like B-Stock and Liquidation.com operate in a similar capacity - they'd be out of business with all their complaints of non-conformance of goods.

    But they're not.

    Because buyers understand the risks of getting into the salvage/customer return business.

    We convey these risks to buyers. They may proceed or not, we treat them with equal respect.

    I just cannot see how anyone can reject something without proof - I mean, this would open the entire wholesale world up to being defrauded. Buyers could pick out nice items and claim the rest didn't conform, and companies like ours would be none the wiser because, well, we're not there when goods are delivered.


  4. #4
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    If you have no record of the contents of the shipment you have no argument that the reciever did in fact receive toys. Since the goods are not shipped by you you are relegated to using the shipper created by whomever did ship it. Does that document support your claim there were toys in that shipment?

    As to proof: how does the recipient prove a negative? You need to prove the positive.


  5. #5
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    Quote Originally Posted by Phantasmo View Post
    We purchase direct from retailers. Not every purchase is manifested.
    I find that an odd way to operate. It is like buying a surprise bag, not knowing what you will find or whether the purchase price was worth the surprise.

    Quote Originally Posted by Phantasmo View Post
    I just cannot see how anyone can reject something without proof - I mean, this would open the entire wholesale world up to being defrauded. Buyers could pick out nice items and claim the rest didn't conform, and companies like ours would be none the wiser because, well, we're not there when goods are delivered.
    It seems to me that, because you are not there when goods are delivered, you would benefit from having a detailed inventory of what was shipped.

    Your contract may or may not protect you here. It would have to be read in its entirety. The buyer, however, wanted toys and you have no idea if toys were sent. He says they weren't. He can't prove a negative (no toys were sent) and you have nothing apparently to prove a positive (toys were sent).

    If he sues, find an attorney in your area to help with your defense.


  6. #6
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    THere are a few big name firms that also play the nonconforming shipment game to beat up on vendors...or shippers ..some of them even backcharge for excess stuff they keep anyway....some of this boil down to knowing your customers ..or quickly learning who you dont want in future .

    I sort of get one picture...it's sort of a suprise box at a fixed price but buyer gets to open box and sort thru it then decide if he really will pay. And you were never quite sure what was in box ...or stays in box ... ....tough business model.


  7. #7
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    Quote Originally Posted by HRZ View Post
    THere are a few big name firms that also play the nonconforming shipment game to beat up on vendors...or shippers ..some of them even backcharge for excess stuff they keep anyway....some of this boil down to knowing your customers ..or quickly learning who you dont want in future .

    I sort of get one picture...it's sort of a suprise box at a fixed price but buyer gets to open box and sort thru it then decide if he really will pay. And you were never quite sure what was in box ...or stays in box ... ....tough business model.
    It is a business model that opens itself up to rejection of delivered goods as nonconforming.

    Without any idea what is being shipped, Phantasmo is bound to have unhappy purchasers and little proof that goods were not as promised.


  8. #8
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    Quote Originally Posted by justalayman View Post
    As to proof: how does the recipient prove a negative? You need to prove the positive.
    Again, the truckload presented to the buyer was toys mixed with other categories. A mixed toy load.

    If I sue, I would need to prove my case by backing my claim toys were sent.

    If buyer sues, they would need to prove they didn't receive toys mixed with other categories.

    While America is an overly litigious country, a standard of proof exists to deter fraud.


  9. #9
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    Quote Originally Posted by quincy View Post
    It seems to me that, because you are not there when goods are delivered, you would benefit from having a detailed inventory of what was shipped.
    I do agree in principle.

    However, goods are spread around by verbal representation and pictures.

    As stated above, we do get manifested lots. It is up to the retailer (i.e. Target) if they feel like itemizing their inventory before selling in the secondary supply chain.

    Yes, it's an industry of chance. And, as one comment above stated, it leaves guys like myself (brokers) open to scrutiny because I have no recourse when bought but can be left holding the bag if my buyer feels like litigating.

    The exact statement I have signed:

    ---

    TERMS AND CONDITIONS: ITEMS SOLD "AS IS" - FOB.

    All items are RETURNS/SALVAGE unless otherwise stated. Items could be damaged, not working, not salvageable or missing parts. Your payment of an invoice constitutes your acceptance of all terms set forth on this page. Any freight charges are the responsibility of the consignee. Any additional freight costs incurred due to detention fees or missed appointments will be the responsibility of the consignee. You must not use the Department Store/Retailer's name or any of it's brands in any of your advertising. All product must be defaced. All labels and price stickers must be removed.

    You accept this responsibility and hold harmless (company name), their officers, employees, associates and affiliates from and against any and all claims, suits, liens, judgments, damages, losses and expenses including reasonable legal fees and costs arising in whole or in part and in any manner from acts, omissions, breach or default. Should any dispute arise with (company). you agree that exclusive jurisdiction & venue for any litigation arising out of such dispute shall be in (our county), Indiana.

    Signature: ______________________


    ---

    This is signed before payment and shipping occur.


  10. #10
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    Quote Originally Posted by Phantasmo View Post
    Again, the truckload presented to the buyer was toys mixed with other categories. A mixed toy load.

    If I sue, I would need to prove my case by backing my claim toys were sent.

    If buyer sues, they would need to prove they didn't receive toys mixed with other categories.

    While America is an overly litigious country, a standard of proof exists to deter fraud.
    Why would end buyer sue? They just wonít pay which forces you to sue.


  11. #11
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    Quote Originally Posted by Phantasmo View Post
    I do agree in principle.

    However, goods are spread around by verbal representation and pictures.

    As stated above, we do get manifested lots. It is up to the retailer (i.e. Target) if they feel like itemizing their inventory before selling in the secondary supply chain.

    Yes, it's an industry of chance. And, as one comment above stated, it leaves guys like myself (brokers) open to scrutiny because I have no recourse when bought but can be left holding the bag if my buyer feels like litigating.

    The exact statement I have signed:

    ---

    TERMS AND CONDITIONS: ITEMS SOLD "AS IS" - FOB.

    All items are RETURNS/SALVAGE unless otherwise stated. Items could be damaged, not working, not salvageable or missing parts. Your payment of an invoice constitutes your acceptance of all terms set forth on this page. Any freight charges are the responsibility of the consignee. Any additional freight costs incurred due to detention fees or missed appointments will be the responsibility of the consignee. You must not use the Department Store/Retailer's name or any of it's brands in any of your advertising. All product must be defaced. All labels and price stickers must be removed.

    You accept this responsibility and hold harmless (company name), their officers, employees, associates and affiliates from and against any and all claims, suits, liens, judgments, damages, losses and expenses including reasonable legal fees and costs arising in whole or in part and in any manner from acts, omissions, breach or default. Should any dispute arise with (company). you agree that exclusive jurisdiction & venue for any litigation arising out of such dispute shall be in (our county), Indiana.

    Signature: ______________________


    ---

    This is signed before payment and shipping occur.
    And nowhere in that does it say end buyer gets stuck with whatever you send them even if it isnít what they contracted to purchase. If the contracted for toys you have to send toys. If they donít receive toys, they owe you nothing.


  12. #12
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    Quote Originally Posted by Phantasmo View Post
    I do agree in principle.

    However, goods are spread around by verbal representation and pictures.

    As stated above, we do get manifested lots. It is up to the retailer (i.e. Target) if they feel like itemizing their inventory before selling in the secondary supply chain.

    Yes, it's an industry of chance. And, as one comment above stated, it leaves guys like myself (brokers) open to scrutiny because I have no recourse when bought but can be left holding the bag if my buyer feels like litigating.

    The exact statement I have signed:

    ---

    TERMS AND CONDITIONS: ITEMS SOLD "AS IS" - FOB.

    All items are RETURNS/SALVAGE unless otherwise stated. Items could be damaged, not working, not salvageable or missing parts. Your payment of an invoice constitutes your acceptance of all terms set forth on this page. Any freight charges are the responsibility of the consignee. Any additional freight costs incurred due to detention fees or missed appointments will be the responsibility of the consignee. You must not use the Department Store/Retailer's name or any of it's brands in any of your advertising. All product must be defaced. All labels and price stickers must be removed.

    You accept this responsibility and hold harmless (company name), their officers, employees, associates and affiliates from and against any and all claims, suits, liens, judgments, damages, losses and expenses including reasonable legal fees and costs arising in whole or in part and in any manner from acts, omissions, breach or default. Should any dispute arise with (company). you agree that exclusive jurisdiction & venue for any litigation arising out of such dispute shall be in (our county), Indiana.

    Signature: ______________________


    ---

    This is signed before payment and shipping occur.
    What normally happens with nonconforming goods is they are rejected and returned (but your no return policy prevents that) or the goods are accepted as is (which your purchaser apparently does not want to do, although he signed a contract acknowledging goods were sold as is) or a purchaser sues for return of the purchase price.

    Your contract says essentially that your company makes no guarantees and what is sent may not be what is ordered and the purchaser can't return the order and the purchaser can't get a refund. That means the unsatisfied purchaser can only withhold payment (if the order was not prepaid) or sue for a refund (if the order was prepaid).

    It is true that the buyer if he sues must prove his claim against you. It is his suit and he has the burden of proof. You will counter with whatever evidence you have to defeat his claim.

    It comes down to his word and evidence of promises of toys (if he has this, perhaps in an email) and evidence of no toys (if he has this, perhaps through a witness) against your word and evidence (contract, shipping contents, whatever), and the judge will decide whose arguments have more weight.

    And with no evidence other than your word against the purchaser, the purchaser just needs to be more believable than you.

    Your contract helps you. The lack of an items list hurts you.

    Good luck.


    Last edited by quincy; 11-13-2017 at 11:37 AM.
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