Sale or return - legal definition/interpretation?!!!

[Employment Law Clinic]

Now, if you were a member of a business community that offered that professional advice for free (and unlimited), you could save yourself some money and have a lot of other benefits...!

Aren't these forums a "business community that offers professional advice for free (and unlimited)"?


Karl Limpert

 

[Paul Kelly ICHYB]

@kulture

• "normally sale or return means the retailer either sells the good or returns them"
  
• You are right, however, unless defined, it also means 'if not sold we can return them, but, if you want them, you come and get them.
• I have done many of these deals, both as buyer and seller and the only way to make it clear cut is to have the agreement documented!

@Pish_Pash

• 'reject' would not normally mean after they have been accepted for sale, distributed and sold
• The comment re website listing has some validity, but, unless you have a specific agreement on where it goes, a retailers can put the stock where they want, without comeback from you!
• Your 7 points, whilst valid to you, mean nothing (or little) to the buyer.
• "confidentiality grounds" - if their standard terms, unlikely to fall under confidentiality agreements.
• If they purchased on usual T&C's, sit back and stop worrying. They will try to find faults and reason to return, but you just say no!
  
• 'replacement buyer' - has the one you dealt with left? You are looking even more in the clear, if yes!

 

[Paul Kelly ICHYB]

Karl,

these are a business forums where advice is given, not always professional and sadly, sometimes VERY wrong.

If you want definitive and accountable advice, go to a qualified professional!

 

[john1989]

Karl,

these are a business forums where advice is given, not always professional and sadly, sometimes VERY wrong.

If you want definitive and accountable advice, go to a qualified professional!

You could apply that to every question on the forum.

If everyone did that, there would be no online community for you to try and sell to

 

[MOIC]

Karl,

these are a business forums where advice is given, not always professional and sadly, sometimes VERY wrong.

If you want definitive and accountable advice, go to a qualified professional!

I have known (and received) very bad advice from professionals and in some cases they were charging in excess of £200 per hour.

 

[Pish_Pash]

Firstly, let me applaud everyone's excellent input...this place really is a most wonderful meeting of sharp & experienced minds (& thanks for resisting the temptation to say "You see, I told you so").

Like I say, I knew it could go Pete Tong & that I might have ended up with a load of beaten up stock to collect ...but I wasn't quite expecting "you might wish to write £7,000 of stock off"!)

Ok. my legal advice (from my solicitor relative) is to email back saying something along the lines of that....

"it looks like there been some confusion at your end. Yes whilst there was initial talk of 'Sale Or Return', your actual PO states 'usual terms of purchase', therefore we supplied on that basis - since you have now paid for these goods in full, the title of the goods has now passed to you'

Then ignore them.

@consultant ....yes the initial buyer I negotiated & agreed 'sale or return' with, subsequently was deemed 'out the business for a while' (I only learned this when I delivered the goods several months after our negotiations)

 

[Paul Kelly ICHYB]

@john1989 & @MY OFFICE IN CHINA
I do not want to hijack this great thread - shall we take this to another topic?

 

[john1989]

"it looks like there been some confusion at your end. Yes whilst there was initial talk of 'Sale Or Return', your actual PO states 'usual terms of purchase', therefore we supplied on that basis - since you have now paid for these goods in full, the title of the goods has now passed to you'

Are you not tempted to add the following?

"I'd like to take this opportunity to thank you for your valued custom".

 

[MOIC]

Ok. my legal advice (from my solicitor relative) is to email back saying something along the lines of that....

"it looks like there been some confusion at your end. Yes whilst there was initial talk of 'Sale Or Return', your actual PO states 'usual terms of purchase', therefore we supplied on that basis - since you have now paid for these goods in full, the title of the goods has now passed to you'

By stating "initial talk of "Sale Or Return" may leave the door open to a pre contractual understanding.

Who am I to argue with the advice given by a solicitor!

 

[MOIC]

@john1989 & @MY OFFICE IN CHINA
I do not want to hijack this great thread - shall we take this to another topic?

I don't think it's necessary.

 

[Pish_Pash]

Are you not tempted to add the following?

"I'd like to take this opportunity to thank you for your valued custom".

Brillant!

Actually, I am going to take the opportunity tell them where - in my opinion - they failed (because they didn't get across the main USP of the product in their literature & didn't put it on their website - the product really needs a video on their website to show the USP)

By stating "initial talk of "Sale Or Return" may leave the door open to a pre contractual understanding.

Who am I to argue with the advice given by a solicitor!

I raised this, but apparently, the PO's 'usual terms' supercedes it.

 

[Sparx]

Genuine question - who / what defines the 'usual terms' ?

 

[MOIC]

Genuine question - who / what defines the 'usual terms' ?

The Buyer

Everything they can think of to wriggle out of a situation.

 

[kulture]

The Buyer

Everything they can think of to wriggle out of a situation.

Not strictly true. The "usual terms" could be supplied by either side. It would normally tend to be the larger companies who have usual terms and insist on using them. For the majority of retailers this would be the supplier who imposed the terms. It is only the very large retailers (for instance supermarkets) who would reverse this position.

 

[Pish_Pash]

(burning the midnight oil here)...does anyone know what the situation with cheque payment is? Their cheque arrived on 13 Nov ...I banked it that same day. When I received their bombshell email (20 Nov), I instantly checked my bank account , the amount is clearly showing on my online statement.....is that it? Done & dusted? The dosh is mine. Can they cancel the cheque (for example, if it's still deemed being 'processed'?)

Perhaps it would be better to go silent for a few more days & checking my bank statement again before sending them my reply?!

 

[MOIC]

Not strictly true. The "usual terms" could be supplied by either side. It would normally tend to be the larger companies who have usual terms and insist on using them. For the majority of retailers this would be the supplier who imposed the terms. It is only the very large retailers (for instance supermarkets) who would reverse this position.

I was referring to the context of the thread.

A larger retailer being supplied by a one man band.

 

[MOIC]

(burning the midnight oil here)...does anyone know what the situation with cheque payment is? Their cheque arrived on 13 Nov ...I banked it that same day. When I received their bombshell email (20 Nov), I instantly checked my bank account , the amount is clearly showing on my online statement.....is that it? Done & dusted? The dosh is mine. Can they cancel the cheque (for example, if it's still deemed being 'processed'?)

Perhaps it would be better to go silent for a few more days & checking my bank statement again before sending them my reply?!

It generally takes 3 working days to clear a cheque and the funds to be usable.

To be sure, why don't you transfer funds from that account into another account (if there are no cleared funds it will not allow you to do so).

Then, after a few days return the money to the original account.

I suspect that their accounts department have done things correctly and it's another department that has poked their noses in to see what can be "salvaged" from a situation of their own making by not including the "Sale Or Return" within the contract.

(I still wouldn't bring up that Sale Or Return was discussed prior to the PO they presented.

It could be proven that there were substantial discussions and agreements made by email to support a Sale Or Return agreement and no correspondence whatsoever, to support that it was not a Sale Or Return agreement, apart from the PO (Which should be the contract, but other circumstances and evidence can be brought forward to argue this case . . . . . .Judges often see things differently from the layman and will formulate the overall picture based on the evidence provided.

 

[Pish_Pash]

There's a late entry disaster here.

Lying in bed I had an "Oh my god moment" & got straight up, sure enough, despite their PO saying 'supply goods on usual terms', I've unfortunately invoiced them (i.e. after their PO was received), with an 'order notes' tucked away at the bottom of my invoice "Supplied on a sale or return basis" ....aaaarrgh ...I missed a perfect opportunity to say nothing (you live & learn) & I guess that changes the dynamics/argument!!! (btw: I hadn't showed my invoice to my solicitor relative, so I've just updated him via email & now need to know what he thinks)

1. Say nothing? (see what happens!!! Time makes this more difficult for them, to keep this stock intact, which will make it difficult to meaningfully take me to court who will surely tell them they must provide the stock to me - either fro me to collect from their main warehouse or to my premises)

2. Say to them, “sorry too too late, there wasn’t any detailed/signed 'sale or return agreement' about when the product should be returned by, we invoiced you on 31st July & despite us prompting you since (with no timely reply whatsoever from yourselves), you have since sent full payment through (i,.e. acceptance of the goods in full)…the title for these goods is therefore now in your name."

Or, if I’m in a corner & must now accept that my invoice oversight will indeed mean I’m held to ‘sale or return’ terms in a court….

3. Say ‘There wasn’t any detailed ‘sale or return’ agreement in place, in the light of this, the term can generally be accepted to mean the unsold product should be returned by yourselves to us in a sellable condition. Since we’ve now received full payment paid for the goods, please return the goods to us, we will inspect the goods towards deciding how many are still in a sellable condition & then issue a credit note accordingly" (least painful)

4. Say “Pull the goods back to the point of delivery, we will collect, inspect & issue a credit note for those units that are still in saleable condition” (second least painful)

5 Accept defeat & say “Pull the goods back to the original point of delivery, we will collect, inspect and refund you back for those units still in a saleable condition” (starting to get painful)

6. Collect the goods from several hundred nationwide branches or write the stock off (disaster) & refund them back (disaster)

 

[MOIC]

There's a late entry disaster here.

Lying in bed I had an "Oh my god moment" & got straight up, sure enough, despite their PO saying 'supply goods on usual terms', I've unfortunately invoiced them (i.e. after their PO was received), with an 'order notes' tucked away at the bottom of my invoice "Supplied on a sale or return basis" ....aaaarrgh ...I missed a perfect opportunity to say nothing (you live & learn) & I guess that changes the dynamics/argument!!! (btw: I hadn't showed my invoice to my solicitor relative, so I've just updated him via email & now need to know what he thinks)

1. Say nothing? (see what happens!!! Time makes this more difficult for them, to keep this stock intact, which will make it difficult to meaningfully take me to court who will surely tell them they must provide the stock to me - either fro me to collect from their main warehouse or to my premises)

2. Say to them, “sorry too too late, there wasn’t any detailed/signed 'sale or return agreement' about when the product should be returned by, we invoiced you on 31st July & despite us prompting you since (with no timely reply whatsoever from yourselves), you have since sent full payment through (i,.e. acceptance of the goods in full)…the title for these goods is therefore now in your name."

Or, if I’m in a corner & must now accept that my invoice oversight will indeed mean I’m held to ‘sale or return’ terms in a court….

3. Say ‘There wasn’t any detailed ‘sale or return’ agreement in place, in the light of this, the term can generally be accepted to mean the unsold product should be returned by yourselves to us in a sellable condition. Since we’ve now received full payment paid for the goods, please return the goods to us, we will inspect the goods towards deciding how many are still in a sellable condition & then issue a credit note accordingly" (least painful)

4. Say “Pull the goods back to the point of delivery, we will collect, inspect & issue a credit note for those units that are still in saleable condition” (second least painful)

5 Accept defeat & say “Pull the goods back to the original point of delivery, we will collect, inspect and refund you back for those units still in a saleable condition” (starting to get painful)

6. Collect the goods from several hundred nationwide branches or write the stock off (disaster) & refund them back (disaster)

Do nothing.

Sit tight.

Wait for a formal letter (Preferably via their solicitors)

Then act.

Unless correspondence was agreed in writing to the contrary, it would be (very) reasonable to accept that the goods should be collected from one address and that the goods should be in saleable condition.

Go to sleep

You will have bigger situations to resolve than this throughout your business life.

 

[Bob]

This is a large company. Do you think that the buyer will have even seen the invoice or if he has that he will remember what it says? As it had a PO number, it probably went straight to accounts and will have disappeared amongst into storage. Sit tight and see what happens.

 

[The Byre]

Go to sleep

You will have bigger situations to resolve than this throughout your business life.

This!

Stop flapping!

Sale or Return can mean many things, including sale or return to retailer. The goods were sold to the retailer, who chose not to return them, but paid for them instead. What happened here, was that nobody defined terms. In future, you know that you must define what is meant by a sale and what the word 'return' means precisely.

The fuss you are making over this is not going to be reflected by any major effort by the buyers involved. They have millions to worry about and so you poxy 7k ain't gonna keep anybody awake at the retailer any time soon.

As you have noticed, people come and people go at this retailer all the time, also people rotate desks, so, by the time anybody actually does anything concrete, the whole issue will be (a) too small, and (b) too old for anybody to get into a flap over.

Retailers tend to deal with very large suppliers who are sending out large quantities of goods all the time. Credit and debit notes fly back and forth and drivers get orders to pick up various goods and drop others off continuously.

I would cover my tracks by posting T&C on my website stating something along the lines of - "Goods sold on a so-called sale-or-return basis remain the property of the Pish-Pash Enterprises Ltd. and must be paid for within three (3) calendar months. Ownership and title of all goods supplied pass to the customer on payment for these goods and with payment the sale is deemed to have been completed."

 

[Pish_Pash]

This is a large company. Do you think that the buyer will have even seen the invoice or if he has that he will remember what it says?.

Agreed, but their legal team (who will inevitably get involved now) will spot this instantly "Hah, we've got him!"!!!

MOIC - pending being over-ridden by my relative solicitor, I agree that time & silence are my friends now...time because this being a big company, they'll have difficulty controlling the stock as time elapses...lost, misplaced stolen (they may even sell more!) ...& the less they have, the less I have to refund (i.e. should this go to court & the judge says "They must return the stock & you must refund them")..

And silence because then I can't incriminate myself (& then confusion reigns)

So yes, I'm sitting tight for now!!!

@The Byre - after posting, I've just read your latest (welcome) input - thanks! My only comment...

The fuss you are making over this is not going to be reflected by any major effort by the buyers involved. They have millions to worry about and so you poxy 7k ain't gonna keep anybody awake at the retailer any time soon.

It's actually about £9k to them ...still small for a multi billion turnover, but this will reflect very badly on their buyers, who I'm pretty sure will have some form of ongoing scorecard/metrics for wins/losses attributed to their buying decisions (IMHO this will be the only reason - if any - that they come after me..to remove egg from their face)

 

[MOIC]

but this will reflect very badly on their buyers,

Didn't you say that the original buyer had already left?

Don't worry about it.

Spend your energy on positive issues, not negative ones.

Leave the ball in their court for now.

 

[john1989]

I would have good money on the buyer having almost instant access to your invoice through a document management system.


Their legal department will also go through all documentation with a fine toothcomb.


Unless you get lucky, the narrative on your invoice will get picked up at some stage.


I agree with the other contributors about sitting tight at this stage. Let them play their cards first.


The worst case scenario can only be collecting your stock from the depot that you delivered to, surely?

 

[Pish_Pash]

Didn't you say that the original buyer had already left?

"Out the business for some time" was how it was described to me. The minute I learned of this I thought "Oh oh", because if the buyer is 'out the business' due something like capability, then the product I supplied them with - being that buyer's decision - is surely toxic & nobody will have wanted to be associated with the product (of course it may well be that she's out the business for less sinister reasons...maternity leave? Parental leave etc.)

I agree with the other contributors about sitting tight at this stage. Let them play their cards first.

The worst case scenario can only be collecting your stock from the depot that you delivered to, surely?

yes, that's how I see it (which is far less a worse case scenario than writing £7k off or spending 3 months on a UK tour!)

 

[The Byre]

buyers, who I'm pretty sure will have some form of ongoing scorecard/metrics for wins/losses attributed to their buying decisions

Some do, some don't, some mix with departmental scores. You forget that within any and every large retail organisation, disasters are the order of the day. Trucks get totalled, whole containers full of flat screen TVs go missing, lawsuits fly around their heads, goods are returned on the hour, every hour, key members of staff fall down dead, local radio wants interviews about toys that have killed children, shops get flooded, others burn down, drivers get pulled over drunk, ad campaigns fail to deliver, institutional investors threaten legal action and half of all suppliers are late.

As a retailer, you spend half your time putting out fires - or as on US buyer put it to me "I feel most days like a one-legged man in a butt-kicking contest!"

 

[Pish_Pash]

It generally takes 3 working days to clear a cheque and the funds to be usable..

Well, we are now into the sixth working day (not including the day of the cheque being deposited), the money is still showing in my account.

To be sure, why don't you transfer funds from that account into another account (if there are no cleared funds it will not allow you to do so)..

That's a reasonable idea, but I'm more worried that - even if the cheque has cleared - whether it can be reversed over the coming days/weeks.....

 

[MOIC]

That's a reasonable idea, but I'm more worried that - even if the cheque has cleared - whether it can be reversed over the coming days/weeks.....

No, it can't.

 

[crelding]

We have worked on a sale or return basis a few times. It can mean 2 things to us:

1 - the retailer buys it, and sells it. It is 100% theirs, not ours. if the customer returns an item to the retailer, we will accept the cost of the return ourselves (what happens to the product varies, either the retailer can keep it, they ship it back at their expense, or we collect it at our expense).

2 - We give the retailer the product to see if it sells. Anything they sell, they pay for monthly, and they have the option to return anything they don't sell to us (which will terminate the contract). Again, who foots the bill for shipping varies, but usually it is us who will pay for the stock to be returned.

Simply put SOR is a vague way of doing business. So it is open to debate. If you apply number 1 here, it is theirs until a customer returns it. Apply number 2, and it is a different story.

I think a reasonable resolution would be for them to ship the products back to you, or at the very least, have then all sent to one place for you to collect (which might as well be your address tbh). Once the items are received/ inspected then refund the value of what you have had returned.

Having said that, I think you could quite easily tell them keep the stock they paid for and be done with it.

 

[Pish_Pash]

I think a reasonable resolution would be for them to ship the products back to you, or at the very least, have then all sent to one place for you to collect (which might as well be your address tbh). Once the items are received/ inspected then refund the value of what you have had returned..

Exactly, but in the light they're being unreasonable/unprofessional & clearly trying to work their ticket, if push comes to shove, I prefer your other option...

... tell them keep the stock they paid for and be done with it.

But for now, I'm going into radio silence.

There won;t be any love lost or repeat orders...it looks like it's not going to be worth my bother getting involved with large retailers under my present Asian supplier's arrangements (I jumped through hoops to redesign the packaging specifically for the retailer, I had to wait 6 months from the date of me paying my supplier to getting my money from this customer ....& now this hassle/grief as a dessert)

 

[MOIC]

Lets change the topic.

What's.on your dining table at the moment?

You need some light relief and to forget this episode for the time being.

Chances are it will drag into 2017.

 

[Pish_Pash]

Lets change the topic.

What's.on your dining table at the moment?
.

My customer's PO & my invoice to them ;-) ...I take your point though, until something now happens, we're probably done!

 

[MOIC]

My customer's PO & my invoice to them ;-) ...I take your point though, until something now happens, we're probably done!

If it were me, I would burn it.

The paperwork, not the table!

 

[The Byre]

Chances are it will drag into 2017.

I am right now chasing a deal that began life in 1988. We bought a bit of property with a view to develop it and sell it on. Well, that fell to bits on planning. Then we rented it out as a parking lot. Now the city fathers have OK'ed a total redevelopment scheme for that part of the city and we hope to sell the whole thing to the much larger scheme for a healthy profit.

We got the green light from the planning people in February and were told that the deal should go through in Q2. Now a second company has entered the scene with a competing plan, so the city fathers have to decide between the two schemes. How long that will take is anybody's guess!

My only (slight) problem, is that I relied on the profit to start a new enterprise, for which I already have signed contracts and have a 130 sq m building with two floors standing as a shell and we are supposed to begin work and hiring next Summer.

Rome will only start burning next year some time, but at the same time, our largest contract-customer has told us that they are collapsing and will almost certainly go out of business in March.

So it's business as usual!

 

[MOIC]

I am right now chasing a deal that began life in 1988. We bought a bit of property with a view to develop it and sell it on. Well, that fell to bits on planning. Then we rented it out as a parking lot. Now the city fathers have OK'ed a total redevelopment scheme for that part of the city and we hope to sell the whole thing to the much larger scheme for a healthy profit.

We got the green light from the planning people in February and were told that the deal should go through in Q2. Now a second company has entered the scene with a competing plan, so the city fathers have to decide between the two schemes. How long that will take is anybody's guess!

My only (slight) problem, is that I relied on the profit to start a new enterprise, for which I already have signed contracts and have a 130 sq m building with two floors standing as a shell and we are supposed to begin work and hiring next Summer.

Rome will only start burning next year some time, but at the same time, our largest contract-customer has told us that they are collapsing and will almost certainly go out of business in March.

So it's business as usual!

Sometimes in business, things are beyond your control.

A good business man makes decisions, adapts to a situation and moves ahead.

Sometimes, it's the challenge that keeps you going!

 

[Root 66 Woodshop]

Quick question... and purely out of interest - as I've been in a similar boat to you some years back... however everything worked out in my favour... simply because I told them to go F themselves

What was the date on your invoice - and the date that you provided the goods in the first place?

To some people it may sound irrelevant but with what happened to me while running my business it actually helped a lot.

 

[Pish_Pash]

There PO was dated 17 July (their earlier email - essentially a letter if intent - was received in May).

The freight company I used attempted delivery to their warehouse on 30th July but the shipment was rejected by their warehouse due to the lorry driver "not having the correct paperwork" (which is wrong - he had everything that was asked of prior). We rescheduled & the goods were accepted at their warehouse on Monday 3rd of August.

On the 31st July, I asked their admin people when we could invoice, he said "You can invoice us now if you want", since it was last day of the month, I quickly invoiced them that same day! (invoicing them on the 31st July has probably resulted in me trousering their payment 6 working days ago ....else invoicing on a 90 days EOM payment basis the following Monday (3rd August) would not have seen payment for another few weeks yet!)

 

[Andrew Chambers]

Just a quick point. It's all very well ignoring them for now, but don't that just because you've not heard anything in six months time it's all forgotten about. This'll come back to bite you when they do their annual stock take, if not before. Also don't think "it's just £9,000 I doubt they'd bother". That £9k represents in excess off £200,000 of sales, they won't be writing that off.

If it's going to be a worry to you sit on the £7k, earn a few quid in interest, and be prepared to refund when the time comes.

 

[john1989]

If the retailer thought the £9k worth of stock could turn into £200k of sales, I don't think this thread would have even started

 

[Paul Kelly ICHYB]

@Andrew Chambers - spot on!

@john1989 - £9k would be the net profit of £200k sales, not the cost of...

@Pish_Pash - did you trade through a ltd company or as a sole trader?