Is a verbal Agreement the same as a written agreement??

[Merchant UK]

Had this asked of me today and i was stumped not knowing the answer as i guess its not something that happens very often.

A guy works for a manufacturing company as self employed. 18 months ago in the middle of the ressession, he agrees to sell some of that company's products himself and set up a website to gain sales for the company he was working for.

Now that company gave him a 30 day account and trade prices and for 18 months this has worked fine.

Now the Guy gets told by the Managing Director that he's not getting 30 days and he wants all the money paid, before letting him have any further goods, he's also put the prices up from Trade to Retail, he's also asking the guy that he wants Payment upfront for any further orders, which the guy cannot do.

Now the guy is one month worth of payments owning and no way to be able to pay (since he's being prevented from selling further by unreasonable demands)

Result is now after the 18th month is this guy is owing him money for the months worth of sales (£5000) and is now in a position of not being able to trade any further because the company has made it so he cannot.

What are his options, Does a verbal contract come into play or should the guy of asked for a written contract.

Funny enough the back of his invoice state payment in 30 days from invoice date???

Bit of a nightmare question, Sorry guys, but any help will be helpful

 

[LawHound]

It sounds like the the business supplying has changed their credit terms, this could be due to pressure on them or because this account has now become an increased risk for some reason. Without a written contract, unless the period of credit was discussed in details in the presence of a witness, it will be very difficult to rely on the arrangements previously in place.

 

[Merchant UK]

It sounds like the the business supplying has changed their credit terms, this could be due to pressure on them or because this account has now become an increased risk for some reason. Without a written contract, unless the period of credit was discussed in details in the presence of a witness, it will be very difficult to rely on the arrangements previously in place.

I guess that the guy is a bit worried that he's set up this business and now he's prevented from running it.

The credit terms has indeed changed but there is no written agreement or changes to the company terms and comditions, That still states 30 days after invoice date. However as the company has made it near enough impossible for the guy to trade.

How can he continue to trade and pay his bills when he's prevented by the same company in doing so.

Witness or not after successfully trading for 18 months is this not evidence of the original verbal contract???

 

[LawHound]

You can try to enforce the verbal agreement on credit terms for the current outstanding invoices as the terms are on there. You cannot ( as in struggle to) force a supply of goods on terms agreed where there clearly is a dispute on what was agreed as an ongoing condition of the terms. The only thing mentioned here is written invoice payment date and no written contract as to the rest, is this correct?

 

[Kernowman]

Of course, there is no substitute for a written agreement, but a verbal agreement is an agreement nonetheless.

So how do we know that an agreement has been made? The evidence is there as witnessed by 18 month's worth of business transactions. In the absence of a written agreement however, then we have to resort to a simple test of reasonableness. Is it reasonable for one party to unilaterally go to the heart of the agreement by witholding monies, stock and/or credit terms without just cause?

To be honest, I cannot see anyone reasonable doing that, so is/has there been a payment/supply difficulty between the MD and your "guy" that we cannot see?

 

[Merchant UK]

Of course, there is no substitute for a written agreement, but a verbal agreement is an agreement nonetheless.

So how do we know that an agreement has been made? The evidence is there as witnessed by 18 month's worth of business transactions. In the absence of a written agreement however, then we have to resort to a simple test of reasonableness. Is it reasonable for one party to unilaterally go to the heart of the agreement by witholding monies, stock and/or credit terms without just cause?

To be honest, I cannot see anyone reasonable doing that, so is/has there been a payment/supply difficulty between the MD and your "guy" that we cannot see?

I think what it boils down to is the fact that the Guy did extremely well at selling the goods whislt still working for the company and the company has decided that it wants to stop this and take the business for itself.

leaving the guy with no customers , no sale, no money.

In answer to your question, 30 days credit was always paid towards the end of the month, Bank statements and cheques support this. The only amount outstanding is the 30 days credit to which no sales have been made in that month because of the company's reluctance to let him make any more money.

I've double checked everything and its a case of pure greed, The guy did well when the company wasn't, Now it seems the company wants it all. But the guy is stating that the company broke the terms of their agreement over the past 18 months and as a result he has not earn't anything for the past 3 weeks??

Told you it was a hard one

 

[Merchant UK]

You can try to enforce the verbal agreement on credit terms for the current outstanding invoices as the terms are on there. You cannot ( as in struggle to) force a supply of goods on terms agreed where there clearly is a dispute on what was agreed as an ongoing condition of the terms. The only thing mentioned here is written invoice payment date and no written contract as to the rest, is this correct?

The Guy was asked by the company to help sell its products during the ressession. he did that and a good job too, in fact he increased sales as a result.

The Company had now tried every dirty trick in the book to prevent him making any more morney or sales, by one of the following methods

1. Increasing Trade price to match Retail price - Thus no profit
2. Refusing 30 days credit as previously been available for the past 18 months
3. Refusing to give any products unless paid for in advanced for the full retail price

4. Puropsely delaying manufacture of goods until customers are angry and demanding their money back only to offer to supply them direct, at a cheaper price.

All the above 4 are happening now as we speak, Earlier on i had the guy almost in tears on the phone for almost an hour, So sad and such a nightmare, i feel really sorry for him

 

[Kernowman]

Well my advice then is for your guy to have a chat with a lawyer ASAP over the possibility of sueing for breach of contract. It is obviously causing him some considerable stress, so the sooner he takes professional legal advice the better.

 

[Merchant UK]

Well my advice then is for your guy to have a chat with a lawyer ASAP over the possibility of sueing for breach of contract. It is obviously causing him some considerable stress, so the sooner he takes professional legal advice the better.

Thanks kernowman

I've sent him an email saying to go to a solicitor, i thought it was pretty bad form for that company to do what it has, when it was obivious that they need his help when they were struggling.

I also told him whatever happens now, he cannot continue to work for that same company, not after this.

Its really sad cos the guy is a nice bloke with two small kids, sometimes i wish there was more i could do

 

[Kernowman]

Thanks kernowman

I've sent him an email saying to go to a solicitor, i thought it was pretty bad form for that company to do what it has, when it was obivious that they need his help when they were struggling.

I also told him whatever happens now, he cannot continue to work for that same company, not after this.

Its really sad cos the guy is a nice bloke with two small kids, sometimes i wish there was more i could do

It seems always to be the nice guy that get trampled on by these rogues with no moral compass. Wish him good luck from me.

 

[Chris Ashdown]

There is no ongoing requirement for the seller to keep supplying at the old rate and payment period, The seller may be experiencing cashflow problems and needs to close all accounts to help his own company, he may have decided to bring all sales inhouse, thats just life and he can sell or stop selling to whoever he likes

The other day I read of one major supermarket changing its terms from 45 days payment to suppliers to 60 days, you either take it or bale out

Do not waste time with law you are just wasting money

 

[Merchant UK]

There is no ongoing requirement for the seller to keep supplying at the old rate and payment period, The seller may be experiencing cashflow problems and needs to close all accounts to help his own company, he may have decided to bring all sales inhouse, thats just life and he can sell or stop selling to whoever he likes

The other day I read of one major supermarket changing its terms from 45 days payment to suppliers to 60 days, you either take it or bale out

Do not waste time with law you are just wasting money

Hi Chris,

It depends on the contract be it verbal or written, The company has been seling goods cheaper to the customers of the guy in question. if you was having problems you'd sell for as much as you could get , not cheaper.

makes you wonder

 

[Chris Ashdown]

If you own a company you can sell to whoever you like at whatever price you like, thats just life, just like a shop can refuse to sell to you for no reason.

what he had was an agreement not a contract for the supply of goods at a reduced price, I started bying a certain product 7 years ago at a fixed price yet it still goes up each yesr with inflation and any other charges the supplier wants to make, all my suppliers can stop selling to me at any time, its just life and business

 

[Merchant UK]

If you own a company you can sell to whoever you like at whatever price you like, thats just life, just like a shop can refuse to sell to you for no reason.

what he had was an agreement not a contract for the supply of goods at a reduced price, I started bying a certain product 7 years ago at a fixed price yet it still goes up each yesr with inflation and any other charges the supplier wants to make, all my suppliers can stop selling to me at any time, its just life and business

Thanks Chris, i guess thats about the truth of it, i have advised him to up his rates of what he charges that company for doing some of the companys work, by the same percentage, in the mean time he should start looking elsewhere for an alternative supplier

 

[DeepakRulls]

yes it is
an agreement can be made verbally as well and it is enforceable and valid as a written agreement
the problem, of course, is when the parties later claim that the content of the agreement was different or when a party denies that there was a verbal agreement
without a paper its hard to prove the existence and content of the verbal agreement

 

[Cornish Steve]

In case you ever do business with a US company, it depends on the state. Here in Georgia, for example, verbal promises and agreements count for nothing. Sales people, for example, can promise the world - but you'll only get what's in writing. So, in general, be careful and get everything in writing.