Can business C that acts as a distributor for business A, withhold B's goods delivered to C by A but sold by A to B when B owes distributor C?
We are a wholesale manufacturer, Business A, who is in the process of setting up regional local distributors. We have our own truck and delivery directly to a new Distributor C (3 months established and in the initial phase).
Customer B placed a number of orders with us over the last few months, which we expected under the verbal agreement (no official agreement has yet been signed by Distributor C) would be delivered directly to distributor C for collection. Distributor C is obliged to contact Customer B informing them that that their order has arrived and to collect their order. Customer B has a direct account with us. We pay Distributor C a % commission on all orders Customer B places with us.
Distributor C attempted to withhold Customer B's order using that as leverage until Customer B paid Distributor C. Is this legal?
A few weeks ago Customer B told us to deliver their orders directly rather than through the distributor C. When distributor C found out they demanded that we drop Customer B's orders to their business against Customer B's directives. We fully intend to pay distributor C's % commission regardless of whether we are delivering directly to honour the verbal distributor agreement. But to find out that Distributor C is using us in attempt to leverage a debt from Customer B is disturbing. My question is - is that legal? Can they legally physically withhold product ordered to us from Customer B?
Let's assume they have signed a distributor agreement. Would that make the answer any different?
We are a wholesale manufacturer, Business A, who is in the process of setting up regional local distributors. We have our own truck and delivery directly to a new Distributor C (3 months established and in the initial phase).
Customer B placed a number of orders with us over the last few months, which we expected under the verbal agreement (no official agreement has yet been signed by Distributor C) would be delivered directly to distributor C for collection. Distributor C is obliged to contact Customer B informing them that that their order has arrived and to collect their order. Customer B has a direct account with us. We pay Distributor C a % commission on all orders Customer B places with us.
Distributor C attempted to withhold Customer B's order using that as leverage until Customer B paid Distributor C. Is this legal?
A few weeks ago Customer B told us to deliver their orders directly rather than through the distributor C. When distributor C found out they demanded that we drop Customer B's orders to their business against Customer B's directives. We fully intend to pay distributor C's % commission regardless of whether we are delivering directly to honour the verbal distributor agreement. But to find out that Distributor C is using us in attempt to leverage a debt from Customer B is disturbing. My question is - is that legal? Can they legally physically withhold product ordered to us from Customer B?
Let's assume they have signed a distributor agreement. Would that make the answer any different?
