Cancellation of purchase order
Nitish Joshi
(Querist) 25 June 2013
This query is : Resolved
One of our client received a purchase order from a Private Limited Company. There was a clause in purchase order that the company will give 10% advance. Our client in good faith manufactured all his material without receiving any advance. Now that company has given the purchase order to other firm as they offered cheaper rates and stated that as they have not given any advance and thus they are not liable for anything. their argument being manufacturer has to start manufacturing after receiving advance only.
Please suggest the remedies available with our client.
R.R. KRISHNAA
(Expert) 25 June 2013
If there is any specific term in the purchase order that manufacturer has to start manufacturing after receiving advance only as stated by you then your client has no remedy. Check the Terms and Conditions of the purchase order with an advocate.
Nitish Joshi
(Querist) 26 June 2013
Thank you for your reply sir.
The clause in Purchase order is as follows:
1. Terms of Payment: 10% advance balance within 30 days of receipt of material at site.
Nothing has been stated that manufacturer has to start manufacturing the material after receipt of the material.
Also the Purchase order has been signed by them and sent by email. Client does not have its hard copy.
We will take the help of lawyer for filing suit against them.
But please brief us what actions we should take now.
Thanks in advance to you sir.
ajay sethi
(Expert) 26 June 2013
frankly it is necessary to go through the complete terms and conditions of PO before giving answers . without taking any advance how can you start manufacturing work . the fact that purchaser defaulted in payment of 10%advance ought to have made you suspicious .
Amritesh Mishra
(Expert) 26 June 2013
Please mention whether the order has been placed suo moto by the company or after the quotation supplied by you.If the purchase order is initiated by the company, it requires your offer to supply material at a certain price and after that if they have placed order you could claim damages. In any case if order has placed after your quotation, you can claim damages.
Raj Kumar Makkad
(Expert) 26 June 2013
As the purchase order has finally been sent by the purchaser company to your firm so a refusal to accept the manufactured items as per their purchase order cannot be denied merely on the ground that the advance money was not released by it and the confirmation starts only after its release.
An arbitration should be made by appointing an arbitrator.
prabhakar singh
(Expert) 26 June 2013
Facts are with you so no proper interpretation is possible at our end.
However you look to be an advocate.
Hence i advise you to go through the provisions contained in chapter I of the Indian contract Act(Ss.3 to 9)to ascertain if a valid form of contract was arrived at between parties or not.
