Legal Question in Business Law in California

Re: Credit with a Vendor

Vendor credits can be of many types, but if the credit doesn't have any contractual strings attached to it, i.e. your company didn't agree that the credit was somehow restricted, it is probably a general obligation that should be applied 1-for-1 or even refunded in cash upon request.

You need to examine the circumstances under which the credit arose to see if there was mutual consent to the alleged restriction on its use.

This is basically a contract interpretation issue. The creation and existence of the credit is almost unquestionably the result of a contract or contracts between the companies. The contract(s) may be written or oral, express or implied. Sorting the matter out requires figuring out what the contract(s) terms are and applying them fairly and consistently to the situation.