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A customer refused to pay full price. Can we make them? Frances Simm writes for The Times

06 October 2021

We’ve started supplying a new customer under our standard contract terms, but when they had our goods they demanded we accept a lower price and wouldn’t return what we’d sent. We were relying on their payment to meet some other costs so we accepted payment at the lower price. Is there anything we can do?

A: The key question here is what did you say at the time you accepted the lower price? If you didn’t say anything about expecting payment of the full amount later then your options are limited. Your position would be much stronger (particularly if you had to take your customer to court) if, at the same time as accepting the lower amount, you made it clear that you would require payment of the rest at a later date.

As a first step you should check whether your contract says anything specific about recovering your goods. Many contracts will say that even if delivered, the goods are the property of the seller until the buyer has paid for them in full. This is often supported by a right for the seller to go to the buyer’s premises and collect goods that are not paid for. If you have this in your contract, and assuming you made it clear you expected the rest of the purchase price later, you could, in certain circumstances, go to the place where your customer holds the goods and take a proportion of them back to reflect the lower price that was paid to you.

There might also be a commercial solution. If the customer wants more goods, you could require that they pay in full for the first delivery before you will supply anything further.

If the above isn’t possible, you might still be able to persuade a court that you had been forced by your customer to accept a lower payment and that you are entitled to the rest of the purchase price. However, going to court would obviously take time and mean you have to pay legal costs (not all of which you would get back from your customer even if you won). There is also a risk that you are not able to persuade the court that you had no choice but to accept the lower amount and if you lost you would probably have to pay some of your customer’s legal fees.

One option to avoid this sort of situation entirely would be to issue pro forma invoices requiring payment before delivery takes place. Some businesses operate entirely in this way. Alternatively, you may consider it just for new customers or customers with whom you’ve had payment issues (like the one in this example).

This article was first produced for The Times Enterprise Network. Please note this article is behind a paywall.

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