Retail vs Trade pricing for a builders supplier

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floorboard

Active Member
23 August 2019
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Hi there,

I run a small construction company. We initially sourced our building materials from a supplier who offered us trade pricing. They extended us credit as they have done in the past for a project with this trade pricing, however this time they are charging us retail pricing and threatening to sue if we do not pay.

Is there anything legal which would prohibit them from suddenly changing their pricing model? It is now so ridiculous that we can get better prices at Bunnings.

Is there a Code of Conduct or something similar that regulates the building industry?

Thank you very much for any input.
 

Rob Legat - SBPL

Lawyer
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16 February 2017
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There's no price regulation of this sort in the building industry that I'm aware of. It might be worth having a discussion with them to ask why the change in pricing but, ultimately, they get to dictate what they're willing to sell for.
 

floorboard

Active Member
23 August 2019
5
0
31
There's no price regulation of this sort in the building industry that I'm aware of. It might be worth having a discussion with them to ask why the change in pricing but, ultimately, they get to dictate what they're willing to sell for.
Thanks for that.

There was no contract on pricing. They just went ahead and upped it after many successful purchases from them at trade pricing.

Could this be a case of estoppel? I have decided to pay the trade prices and put the ball in their court.
 

Rob Legat - SBPL

Lawyer
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16 February 2017
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Estoppel won’t apply in this case. Each transaction is a separate contract, and it’s commonly accepted that prices can change from time to time. The only possible way an estoppel could be raised is if you agreed to purchase the items, they were items you’d purchased before at the trade price, and they failed to tell you about the increased price until you’d taken delivery. Even then, the remedy is usually return.
 

floorboard

Active Member
23 August 2019
5
0
31
Estoppel won’t apply in this case. Each transaction is a separate contract, and it’s commonly accepted that prices can change from time to time. The only possible way an estoppel could be raised is if you agreed to purchase the items, they were items you’d purchased before at the trade price, and they failed to tell you about the increased price until you’d taken delivery. Even then, the remedy is usually return.
Thank you.

If you had to write a letter in response to their grossly inflated prices, what could it possibly include? Perhaps just one important thing that you would mention.

At the moment I am writing to them pointing out the price differences between the exact same material and attaching the invoices as evidence. It seems to me as it is a tactic they employ commonly, to rope in new customers by undercutting the competition then drastically increasing the prices. It sounds like it is anti-competitive behaviour? This is a very large company. Could looking into the ACCC be an option?
 

Rob Legat - SBPL

Lawyer
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16 February 2017
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Gold Coast, Queensland
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I wouldn't bother with a letter. Take your business elsewhere.0

Anti-competitive behaviour is incredibly complex and difficult to prove. There's a whole range of reasons that go into pricing. I'd be looking around first to see whether the "grossly inflated prices" are roughly equivalent to other retail amounts for similar quality goods.

It is also possible that they're engaging in a 'bait and switch' type operation. You can refer the matter to the ACCC - they won't comment on whether or not they will investigate the complaint.