Refusing to Supply Goods to a Customer Who Is under Deed of Company Arrangement

pformag on 28/11/2018 - 18:26
Last edited 28/11/2018 - 18:40 by 1 other user

Hello Good People,

Need advice.

In my industry, there is a company that went into voluntary administration and now is under DOCA. We only supplied them with a small number of goods before they went bottoms up. They have been a terrible company in our industry, often going 20-30% below market value, and destroying others in the industry along the way. They now are under DOCA, allowing them to continue trading, however, a large number of our customers have said they will stop purchasing from us if we support them.

The owner of the company under DOCA is now threatening our company with a lawsuit because we won't supply them or a 3rd party on their behalf.

1st, Can we refuse business?
2nd, Can they sue us?

Regards

Financial

Comments

  • Baysew on 28/11/2018 - 18:47

    I certainly wouldn't supply anything on credit.

    Refusal to supply products or services

    In most cases, businesses have the right to decide who they do business with.

    • pformag on 28/11/2018 - 18:57

      We couldn't supply on credit, because our insurance won't cover them and we want to refuse to supply COD, as we would lose major customers worth more.

  • MrHyde on 28/11/2018 - 18:47

    Depends what your contract with them says.

    • MrHyde on 28/11/2018 - 18:48

      and agree with Baysew; with them under administration, any supply should be with payment in advance.

    • pformag on 28/11/2018 - 18:59

      No contract. We are a wholesaler, they buy off the floor stock.

      • whooah1979 on 28/11/2018 - 19:07

        No contract. We are a wholesaler, they buy off the floor stock.

        Nice try.

        Cease all verbal communication and get their threats in writing. Call their bluff.

      • MrHyde on 28/11/2018 - 19:09

        Double/triple the price to cover for other lost sales.

  • spackbace on 28/11/2018 - 18:48
    +2

    What did your lawyer/s say?

    • pformag on 28/11/2018 - 18:58

      Ozbargain 1st, Lawyer 2nd (Trying not to go to one just yet)

      • [Deactivated] on 28/11/2018 - 19:38

        ozbargain is always great free legal advice!

  • whooah1979 on 28/11/2018 - 18:59
    +2

    The owner of the company under DOCA is now threatening our company with a lawsuit

    How are they going to sue your company when they can't pay their creditors?

    • pformag on 28/11/2018 - 19:00

      Under DOCA, they wiped 98% off their debt. unsecured creditors got 2c per $1 owed. This is the issue, as the industry is pissed.

      • whooah1979 on 28/11/2018 - 19:03
        +2

        https://www.accc.gov.au/business/anti-competitive-behaviour/…

        When refusing to supply is allowed

        As a general rule, suppliers have the right to choose who they wish to deal with and there are many reasons why a supplier may refuse to supply goods or services.

        For example, a supplier may choose not to supply a business on the basis of the reliability of that business, the cost of delivery, or the presentation of goods and services. Similarly, a wholesaler or manufacturer may find it too costly or inconvenient to sell to everyone who asks.

        If a supplier decides not to supply a business and their reason is not an improper one, the client business will have to renegotiate terms with that supplier or seek alternative suppliers.

  • HighAndDry on 28/11/2018 - 19:16

    EDIT:

    Just leaving this here:

    https://print21.com.au/exclusive-picton-creditors-furious-as…

    The owner of the company under DOCA is now threatening our company with a lawsuit because we won't supply them or a 3rd party on their behalf.

    No contract? No obligation to supply anything. Call their bluff. Plus, not like they have money for lawyers to sue anyway. (the only improper reasons would be potentially: monopolistic (or monopsonistic, I guess) or other anti-competitive behaviour, or discriminatory behaviour). None of that applies here. Oh and by the way?

    however, a large number of our customers have said they will stop purchasing from us if we support them.

    This is a perfectly valid reason to refuse to do business with them.

    • [Deactivated] on 28/11/2018 - 20:23

      This is a perfectly valid reason to refuse to do business with them.

      This sounds anti-competitive. I wouldn't rely on that reason.

      Think about it, if you wholesale to 2 retailers and retailer A who takes most of your stock refuses to stock your products if you supply them to retailer B. Retailer A is exploiting their market share in an anti-competitive manner to the detriment of retailer B and the customer.

      On the other hand if they're damaging your reputation as a business, that might be a nice valid reason ;)

      • HighAndDry on 28/11/2018 - 20:39

        On the other hand if they're damaging your reputation as a business, that might be a nice valid reason ;)

        This, not the other reason. Thanks for clarifying for me haha.

    • whooah1979 on 29/11/2018 - 07:23

      https://print21.com.au/exclusive-picton-creditors-furious-as…

      It sounds doggy running the company into the ground and then get the debt taken off.

      • HighAndDry on 29/11/2018 - 09:25

        It is very dodgy. It also basically penalizes all of that company's competitors who had to manage their finances responsibly and possibly not do as much capital investment (and then write offs) leaving them in potentially a worse competitive position than the company that just went bankrupt.

  • Randxyz123 on 28/11/2018 - 20:33
    +2

    1 & 2

    Call your lawyer. It really isn't the right thing to do, to get the answers from randoms on the internet…

  • mskeggs on 28/11/2018 - 20:42

    If you are a wholesaler, just say you won’t sell because you feel dealing with them will tarnish your reputation. Don’t get involved in saying any other things, and leave other customers out of it.

  • altomic on 29/11/2018 - 00:12
    +1

    cash in hand. Meet the buyer in a public place.

  • Ughhh on 29/11/2018 - 08:46

    Unless you dont mind possibly dodgy legal misinterpretation from layman who could get you into more trouble, get a lawyer.

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