Right to deny sales or service to customer - TX

[bruceaalee]

We are a distributor/wholesaler for various smoking products and tobaccos. Our products are used in restaurants and bars around the world. We had a verbal agreement with customer 1 (Cafe/Bar) that he would be our exclusive distributor in a given area of town. We have however some employees that did not know our agreement so we sold few times to 2 other customers (Customer 2 and Customer 3 - Both are Bar/Cafes) in Customer 1's area by accident and when notified we immediately stopped accepting any new orders.

We have been treatened with law suits by customer 2 citing antitrust/monopoly violations. In the end, I cite right to refuse sale/service as my company's right to not sell to them.

My questions is that does our business have the right to not sell to another busines a product that we make or distribute. Selling to Customer 2 and Customer 3 has become a liability to our business and it is not in our interest even if we never had an agreement with customer 1. Customer 2 has purchased $345.00 worth of a product specific to our company and now says that if we do not supply it, if they go out of business it will be our fault. However, it is known that Customer 2 is already financially unstable and might go out of business anyways. Customer 2 has also made other threats ( on tape ) such as filing lawsuits on the ground of discrimination against women(Customer 2 is female owned).

Quite honestly, new businesses are trying to open beside Customer 1's area all the time to steel their customers by being cheaper, etc. We are so sick and tired of all this drama, phone calls, threats, etc that we want to completely stop selling to anyone in that part the entire city except Customer 1. Would it be our right to make Customer1 our only retailer in their area? Would it be our right make anyone in their area that wants our products to have to talk to Customer 1? Would we be violating antitrust laws or competition laws?

 

[BelizeBreeze]

We are a distributor/wholesaler for various smoking products and tobaccos. Our products are used in restaurants and bars around the world. We had a verbal agreement with customer 1 (Cafe/Bar) that he would be our exclusive distributor in a given area of town. We have however some employees that did not know our agreement so we sold few times to 2 other customers (Customer 2 and Customer 3 - Both are Bar/Cafes) in Customer 1's area by accident and when notified we immediately stopped accepting any new orders.

We have been treatened with law suits by customer 2 citing antitrust/monopoly violations. In the end, I cite right to refuse sale/service as my company's right to not sell to them.

My questions is that does our business have the right to not sell to another busines a product that we make or distribute. Selling to Customer 2 and Customer 3 has become a liability to our business and it is not in our interest even if we never had an agreement with customer 1. Customer 2 has purchased $345.00 worth of a product specific to our company and now says that if we do not supply it, if they go out of business it will be our fault. However, it is known that Customer 2 is already financially unstable and might go out of business anyways. Customer 2 has also made other threats ( on tape ) such as filing lawsuits on the ground of discrimination against women(Customer 2 is female owned).

Quite honestly, new businesses are trying to open beside Customer 1's area all the time to steel their customers by being cheaper, etc. We are so sick and tired of all this drama, phone calls, threats, etc that we want to completely stop selling to anyone in that part the entire city except Customer 1. Would it be our right to make Customer1 our only retailer in their area? Would it be our right make anyone in their area that wants our products to have to talk to Customer 1? Would we be violating antitrust laws or competition laws?

Honestly? You made this mess yourself. Get your verbal agreement in WRITING with terms and conditions. Not only is it a dumb idea legally to depend on a verbal agreement, it's also financial suicide.

 

[bruceaalee]

BelizeBreeze

Thanks for your reply. The agreement was a kind of "Gentlemans" agreement, and we have no issues with Customer 1. Our issues are with the new customers that at this point even if customer 1 never existed we would still not want to do buiness with. I would like to know if customer 2 has any case? Can we deny sales to them based off nothing else than we do not want to sell them a certain product?

 

[clueless3]

These antitrust & discrimination suits are lengthy and hard to prove. They only threaten you. They won't have the cash to bring it to court, let alone get it to go all the way. A business can't blame another for its going out of business. In your case, your lawyer can ask them "Why don't you get another supplier somewhere else? You can't depend on only ONE supplier to sustain a business!" And if they ARE going out of business, they don't have the cash left for lawsuits anyway!

Get all your agreements in writing. And make sure that your employees KNOW the rules. Build it into your sale system so that you can't sell to another customer "by accident"! You are solely responsible for your company's and your employees' actions.