Purchase order contract and settlement laws

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Purchase order contract and settlement laws

I have been sue by one of my supplier for a PO from our LLC. They changed our
terms and marked up the PO with new terms and sent it back to us. We told them we
have to issue a new PO but they went ahead and shipped a small shipment against
the PO. We kept this shipment but told them that this is not correct product and
balance will require new PO. We did not agree to their changes and never released
the PO. Now they claim that they already bought all material. They are filing a
lawsuit. I offered them to settle it at 50 of price. What is the law about how
much they should get in court? Do they really have a contract?

Asked on January 12, 2019 under Business Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

When they sent you the shipment, did you tell them to arrange to ship it back at their expense? If you did, you would be in good shape: if someone changes a P.O. (or contract) you sent them, they rejected your order and counteroffered; you have to accept that counteroffer to make it binding, since no can bind you without your consent. So sending you a revised P.O. and sending you a shipment based on that P.O. if you don't consent to them, will not bind you or obligate you to pay; in this case, they should not be able to get anything.
But if you did not tell them to take the shipment back but kept it, then that action can show agreement to their proposal: you are not allowed to simply keep goods shipped you without returning them (or at least unequivocally making it clear that you want them returned). Proposals, offers, contracts, etc. can be accepted by action as well as in writing, such as by simply keeping materials sent you under it. So it is possible that your action in keeping the shipment showed your agreement to the revised P.O., in which case they could potentially hold you liable for the value of that P.O., less any savings they may have achieved do to any product they did not have to pack and ship (i.e. for the net profit on the P.O.).


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