Business Law Advice Service
Case Study
BUT I THOUGHT THEY WOULD PAY…..
BUT I THOUGHT THEY WOULD PAY…..
Taylor’s Tubing Ltd has supplied £30,000 worth of rubber tubing to Playtime, a children’s toy manufacturer. Taylor’s Tubing’s terms of payment stipulate that payment must be received within 30 days but the invoice is now 60 days overdue.
Mr Taylor knows that a little of the tubing has been used by Playtime to make toys but assumes that the remainder is still packed up in the warehouse. Although Mr Taylor has heard that Playtime may be in some difficulties he is not unduly concerned because he has another customer for the unused tubing. On the advice of someone he met on holiday, Mr Taylor had made sure that his conditions of sale included a retention of title clause which would enable him to reclaim the goods if the invoice was not paid. He is not sure where he stands over the tubing which now forms part of the toys.
Mr Taylor is keen to conclude the deal with his second customer as he is under some considerable pressure from his bank. He checks his paperwork and sees the reference on his invoice to Playtime to the retention of title as detailed on his conditions of sale. However he then discovered that as they were a new customer, Playtime had never received a copy of his conditions of sale. When Mr Taylor approached Playtime about returning the tubing they said that they weren’t bound by Mr Taylor’s conditions, but it didn’t matter anyway as they were about to go into liquidation.
Several days later the bank withdraws funding from Taylor’s Tubing and a Receiver is appointed. Mr Taylor is now unemployed as are the four staff who worked for him.
WHAT SHOULD MR TAYLOR HAVE DONE?
He should have had his conditions of sale properly written by a solicitor and ensured that they were always sent to every customer with each order confirmation. It may have been possible for him to retain the rights not only to the unused tubing but also that which had been used in the manufacture of toys. Then if the invoice was not paid he could have exercised his rights to collect the goods and re-sell them.
At what cost?
A solicitor’s time to write Mr Taylor’s conditions of sale would have cost approximately £900 which is significantly less than the £30,000 value of the invoice and even less than the ultimate loss of his company.
Mr Taylor knows that a little of the tubing has been used by Playtime to make toys but assumes that the remainder is still packed up in the warehouse. Although Mr Taylor has heard that Playtime may be in some difficulties he is not unduly concerned because he has another customer for the unused tubing. On the advice of someone he met on holiday, Mr Taylor had made sure that his conditions of sale included a retention of title clause which would enable him to reclaim the goods if the invoice was not paid. He is not sure where he stands over the tubing which now forms part of the toys.
Mr Taylor is keen to conclude the deal with his second customer as he is under some considerable pressure from his bank. He checks his paperwork and sees the reference on his invoice to Playtime to the retention of title as detailed on his conditions of sale. However he then discovered that as they were a new customer, Playtime had never received a copy of his conditions of sale. When Mr Taylor approached Playtime about returning the tubing they said that they weren’t bound by Mr Taylor’s conditions, but it didn’t matter anyway as they were about to go into liquidation.
Several days later the bank withdraws funding from Taylor’s Tubing and a Receiver is appointed. Mr Taylor is now unemployed as are the four staff who worked for him.
WHAT SHOULD MR TAYLOR HAVE DONE?
He should have had his conditions of sale properly written by a solicitor and ensured that they were always sent to every customer with each order confirmation. It may have been possible for him to retain the rights not only to the unused tubing but also that which had been used in the manufacture of toys. Then if the invoice was not paid he could have exercised his rights to collect the goods and re-sell them.
At what cost?
A solicitor’s time to write Mr Taylor’s conditions of sale would have cost approximately £900 which is significantly less than the £30,000 value of the invoice and even less than the ultimate loss of his company.
Business Law Advice Service
- Free 30 minute consultation
- Guides you through the legal process
- Prevents issues from escalating in the first place
- Covers all areas of employment and business law
- Fully qualified solicitors
- Immediate response by telephone or email
- Clear and pragmatic legal advice
BUSINESS
LAW
0800 028 4396
ADVICE LINE
0800 028 4396
ADVICE LINE
Website Design by:
Home |
Employment Law |
Commercial Property |
Commercial Litigation |
Business Law
Contact Us | Privacy Policy | Copyright Information | Site Map
Contact Us | Privacy Policy | Copyright Information | Site Map
Business Law Advice Service
0800 028 4396 advice@dbf-law.co.uk.
0800 028 4396 advice@dbf-law.co.uk.