Can a corporation refuse to do business with a small business that the’ve worked with in the past, purely because of the vendor’s size?

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Can a corporation refuse to do business with a small business that the’ve worked with in the past, purely because of the vendor’s size?

I’m a one-person technical contractor providing services to a very large corporation. I have a direct invoicing relationship with this corp and I invoice for my services against a P.O. that they created for my company (an LLC). Recently they informed me that they will no longer contract with my company directly. They are forcing me (and all other independent contractors) to use one of their preferred aggregators, who take a 15% commission of our daily pay. Because the corporation doesn’t want to deal with small companies like mine, they are causing me to lose income. Is this legal?

Asked on December 13, 2011 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is completely legal. A business is not obligated to do business with any one in particular--they are allowed to do business with those who meet their needs or preferences. If a preference is to not work directly with smaller companies but to rather work through an aggregator, that is a legitimate business preference and is not one with which the courts would interefere. (If their refusal to work with you was predicated on something like racial discrimination, that might be actionable; but a simple decision to work through aggregators is not legally objectionable.)

Businesses, like people, can decide where to "shop"--just as Dunken Donuts can't take action if you stopped going to them for coffee and instead went to Starbucks, so, too, can you not take action against a client or customer who know wants to work or buy through someone else.


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