Legal Question in Business Law in California
Ethics of reselling supplies
We are a California company with offices in Mass. In the course of engagement in MA with a particular client, we needed to purchase supplies for this client. A nominal amount of time and effort went into locating vendors and negotiating pricing. To this end, the question is, what are the legal stipulations of a services company reselling supplies to the client and marking them up ? In meetings with the client, it was discussed and budgeted for these supplies. It was mentioned that a mark up would be absorbed by the client if my company had to provide the supplies for the project. Since we are classified as a servies company, what if we resell supplies in the line of providing our services and mark up the price ?
4 Answers from Attorneys
Re: Ethics of reselling supplies
There is no problem with what you suggest, unless for some reason the corporate charter of the business is very strictly drafted. But from the facts presented, you are simply asking whether ancillary sales can be a separate profit-center from the core business of rendering services, and the answer to that question is "yes" unless (you'll love this one) the services in question are the practice of law: there is an ABA ethics opinion that addresses this issue and strongly discourages attorneys from earning profits on anything other than the provision of legal services. I know of no other professional association that has imposed similar restrictions on its members.
Best wishes,
LDWG
Re: Ethics of reselling supplies
I think that the only other area in which you need to be concerned is regarding sales tax. If you were to re-sell product from California, you would be required to have a resale tax number in California (even if you ship out of state, and no tax is due).
As far as MA is concerned, you would need to check with someone there. However, if they have sales tax there, I am sure they want you to collect it and turn it over.
Re: Ethics of reselling supplies
I think you have more of a contract issue than an ethics issue. Either your contract allows for the practice of reselling or it doesn't, and the presence or absence of a specific clause on the topic isn't fully dispositive; your right to furnish and mark up incidental supplies may depend upon implied terms and conditions including customary practices in your business.
Not every breach of contract is also a breach of ethics, although some are.
An ethical problem as well as a breach of contract would arise, of course, if you knew it was not permitted and did it anyway, on the theory that it might go unnoticed or that the client would not be able to sue economically.
The sales tax issues have been pointed out to you.
Re: Ethics of reselling supplies
You might check with MA law but i know of no law in CA forbidding that.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
