UNPAID invoice - Manufacturer

[LdiJ]

I agree. Unless these are exceptional handbags, trying to unload $12,000 worth of them stands to be far more time-consuming than filing a lawsuit.

Not necessarily if they are included in an auction. They might only get pennies on the dollar but that is neither time consuming nor complicated. Someone might very well be willing a pay a few thousand at auction for what could be as much as 24k worth of handbags at retail. Remember, the OP is the company that made the handbags, not the company that was going to distribute them. Heck, now that I think about it they could be worth even more than 24k at retail. Depending on the industry cost of manufacturing a product could be as little as 15% of suggested retail price.

 

[quincy]

Not necessarily if they are included in an auction. They might only get pennies on the dollar but that is neither time consuming nor complicated. Someone might very well be willing a pay a few thousand at auction for what could be as much as 24k worth of handbags at retail. Remember, the OP is the company that made the handbags, not the company that was going to distribute them. Heck, now that I think about it they could be worth even more than 24k at retail. Depending on the industry cost of manufacturing a product could be as little as 15% of suggested retail price.

The manufacturer is owed $12,000. I tend to doubt there is much of a market for handbags bearing the logo of a small local business.

 

[LdiJ]

The manufacturer is owed $12,000. I tend to doubt there is much of a market for handbags bearing the logo of a small local business.

There is always a market for any decently made handbags. Not a high end, spend a ton on a handbag market, but there is a market. Heck, I know that lots of the handbags that I have owned have logos, but I couldn't tell you what any of them are/were. I am one of those women who only cares if it has the pockets I need and it is decently made.

 

[quincy]

There is always a market for any decently made handbags. Not a high end, spend a ton on a handbag market, but there is a market. Heck, I know that lots of the handbags that I have owned have logos, but I couldn't tell you what any of them are/were. I am one of those women who only cares if it has the pockets I need and it is decently made.

And, again, you get into the issue of legality in selling goods manufactured with another’s trademark. Permission must be granted for the manufacture of and distribution of rights-protected goods.

This is where the contents of the email or text exchanges become vital. Proof of contract is vital. Otherwise I could make $12,000 worth of Louis Vuitton logo-ed bags and sell them without consequence - and I hope you know that that would be illegal.

 

[Litigator22]

You make some good points, based on the little we know from yb9469789. In fact, I made the same comments myself about trademarks and infringement.

My concern with yb9469789 selling the handbags would come in proving that an agreement actually existed between yb9469789 and the client, for yb9469789 to manufacture the handbags with the client’s logo. Text exchanges are not always the best proof of a binding agreement.

I would not want to see yb9469789 accused of selling counterfeit handbags or of selling inferior goods that harm the value of the trademark.

I still think that, if a contract can be shown to exist, it can be smarter to file a breach of contract suit. Most manufacturers are not in the retail sales business.

With all due respect for your notable perspicacity, I fail to see any logic whatsoever for your steadfast resolve insisting that in consequence of the buyer's breach that it is more practical that the affected seller sue on the contract price rather than attempt to recover some of its loss by selling the goods. I can only attribute it to being unfamiliar with the subject.

Here, for example are you aware that the seller can first proceed to resell the goods and if insufficient results follow, then sue the buyer for the difference between the resale price and the contract price? Including incidental expenses? (UCC 2-706) None of which would be recoverable if the buyer elected to sue for the contract price - as you have recommended.

Moreover, in the event of the buyer's bankruptcy (not entirely unforeseen) the Trustee might successfully argue that by having sued on the contract the seller waived any security interest in the manufactured goods.

Also, regarding the suggestion that the seller would find little market for marked goods. Please be aware that pursuant to the Code the defaulting buyer is entitled to notice of the time and place for sale of the goods. Thereby afforded an opportunity to reduce its loss by inform its otherwise potential retail customers.

 

[quincy]

With all due respect for your notable perspicacity, I fail to see any logic whatsoever for your steadfast resolve insisting that in consequence of the buyer's breach that it is more practical that the affected seller sue on the contract price rather than attempt to recover some of its loss by selling the goods. I can only attribute it to being unfamiliar with the subject.

Here, for example are you aware that the seller can first proceed to resell the goods and if insufficient results follow, then sue the buyer for the difference between the resale price and the contract price? Including incidental expenses? (UCC 2-706) None of which would be recoverable if the buyer elected to sue for the contract price - as you have recommended.

Moreover, in the event of the buyer's bankruptcy (not entirely unforeseen) the Trustee might successfully argue that by having sued on the contract the seller waived any security interest in the manufactured goods.

Also, regarding the suggestion that the seller would find little market for marked goods. Please be aware that pursuant to the Code the defaulting buyer is entitled to notice of the time and place for sale of the goods. Thereby afforded an opportunity to reduce its loss by inform its otherwise potential retail customers.

With all due respect, your arguments have not persuaded me and I still believe that the best remedy is a suit for breach of contract.

 

[LdiJ]

With all due respect for your notable perspicacity, I fail to see any logic whatsoever for your steadfast resolve insisting that in consequence of the buyer's breach that it is more practical that the affected seller sue on the contract price rather than attempt to recover some of its loss by selling the goods. I can only attribute it to being unfamiliar with the subject.

Here, for example are you aware that the seller can first proceed to resell the goods and if insufficient results follow, then sue the buyer for the difference between the resale price and the contract price? Including incidental expenses? (UCC 2-706) None of which would be recoverable if the buyer elected to sue for the contract price - as you have recommended.

Moreover, in the event of the buyer's bankruptcy (not entirely unforeseen) the Trustee might successfully argue that by having sued on the contract the seller waived any security interest in the manufactured goods.

Also, regarding the suggestion that the seller would find little market for marked goods. Please be aware that pursuant to the Code the defaulting buyer is entitled to notice of the time and place for sale of the goods. Thereby afforded an opportunity to reduce its loss by inform its otherwise potential retail customers.

I happen to agree with you completely. However, I have been the CFO of a small US corporation that dealt with customers who occasionally never paid for goods that they ordered in such a manner, therefore I am familiar with the remedies. The customer is also free to bid on the products at auction or simply pay up if they don't want them sold to anyone else.

You are also right that a bankruptcy is not entirely unforeseen. Generally a customer who gets to the point where they can't pay for goods that they ordered on an OEM basis (what was done here) tend not to stay in business much longer.

 

[quincy]

Because we really do not have enough information about the handbags and the trademark or trademark holder, I think yb9469789 should have the text exchanges with the client, and the client’s trademark, personally reviewed by an attorney well versed in trademark law before making a decision to sell off the client’s order. At the very least, yb9469789 would be smart to remove the logos from the handbags before selling the handbags.

 

[LdiJ]

Because we really do not have enough information about the handbags and the trademark or trademark holder, I think yb9469789 should have the text exchanges with the client, and the client’s trademark, personally reviewed by an attorney well versed in trademark law before making a decision to sell off the client’s order. At the very least, yb9469789 would be smart to remove the logos from the handbags before selling the handbags.

Realistically, most logos on handbags are not removeable without destroying the handbag.

 

[quincy]

Realistically, most logos on handbags are not removeable without destroying the handbag.

Then, realistically, one should not sell the handbags with the non-removable logos until speaking with an IP attorney about the risks of doing so.

 

[LdiJ]

Then, realistically, one should not sell the handbags with the non-removable logos until speaking with an IP attorney about the risks of doing so.

And the attorney that the OP consults will tell him that he has the right to mitigate his losses by selling the product.

 

[quincy]

And the attorney that the OP consults will tell him that he has the right to mitigate his losses by selling the product.

Ahh. You’re psychic. Interesting.

There are areas of trademark law that potentially make your “mitigation” solution a risky one. I certainly don’t advise putting any poster at risk when we know so little.

 

[LdiJ]

Ahh. You’re psychic. Interesting.

There are areas of trademark law that potentially make your “mitigation” solution a risky one. I certainly don’t advise putting any poster at risk when we know so little.

I disagree that trademark law controls here. I realize that you believe that it does and will continue to insist upon the same until the cows come home. We already know that at least one attorney disagrees with you as well.

 

[quincy]

I disagree that trademark law controls here. I realize that you believe that it does and will continue to insist upon the same until the cows come home. We already know that at least one attorney disagrees with you as well.

Are you speaking of Taxing Matters? Read his post.

Here from the American Bar Association is an article that addresses some of the problems with the unauthorized distribution and sale of goods protected under trademark law:

https://www.americanbar.org/groups/business_law/resources/business-law-today/2014-july/dealing-with-unauthorized-online-dealers/

You are ignoring some of what trademark law protects, which is not only brand identification but also distribution rights and brand reputation. A trademark has value that (typically) exceeds its cost of manufacture. To undercut the price of the goods can dilute the value. The trademark placed on inferior goods can tarnish the brand.

We have not seen the logo or the handbags. All we know is that a contract with a small business client can purportedly be pieced together in text message exchanges that authorizes the manufacturer to make handbags with the client’s logo - and that the client hasn’t paid. We know nothing about an agreement as to price or quantity and we know nothing about the quality of the goods manufactured (and if these handbags are acceptable to the client).

Once again, trying to sell off the handbags without authorization from the trademark holder can be a risk. Consultation with an IP attorney is wise and advised.

 

[Litigator22]

Are you speaking of Taxing Matters? Read his post.

Here from the American Bar Association is an article that addresses some of the problems with the unauthorized distribution and sale of goods protected under trademark law:

https://www.americanbar.org/groups/business_law/resources/business-law-today/2014-july/dealing-with-unauthorized-online-dealers/

You are ignoring some of what trademark law protects, which is not only brand identification but also distribution rights and brand reputation. A trademark has value that (typically) exceeds its cost of manufacture. To undercut the price of the goods can dilute the value. The trademark placed on inferior goods can tarnish the brand.

We have not seen the logo or the handbags. All we know is that a contract with a small business client can purportedly be pieced together in text message exchanges that authorizes the manufacturer to make handbags with the client’s logo - and that the client hasn’t paid. We know nothing about an agreement as to price or quantity and we know nothing about the quality of the goods manufactured (and if these handbags are acceptable to the client).

Once again, trying to sell off the handbags without authorization from the trademark holder can be a risk. Consultation with an IP attorney is wise and advised.

My thanks to both you and the authors for not redacting the following from your cited article:

In conclusion:

"There is nothing per se illegal about an unauthorized sale of genuine” goods."