Legal Question in Business Law in California

Forced to raise my rates? Sub/Contractor service

A large retail chain sells a product to a customer. This customer needs the product delivered to their home, and set up/installed. The retail chain does not have a delivery department. So they offer the services of a third party delivery company, BUT they add ''X amount of dollars to the fee the third party charges.

The retailer says to the delivery company, ''We increased your rate by ''X'' amount, go ahead and collect that from the consumer and pay it back to us when the job is completed. Actually, from now on we are marking up all your fees for you to collect and pay back to us.'' The delivery company says, ''can I raise my rates to compensate for higher fuel prices?'' Retailer, ''No, absolutely not, this will raise delivery prices to point it could cost us business.''

So I suppose my question is, is it legal for a company to force a higher rate for a kickback to them, but not allow me to raise my rates for any reason at all?

This retailer is doing this to all 3rd party delivery companies involved nation wide.


Asked on 3/13/08, 7:40 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Forced to raise my rates? Sub/Contractor service

It may not be very fair, but I don't see anything inherently illegal; this is a private delivery service and not regulated common carriage, and the shipper is free to cut whatever deals it can with its delivery contractors.

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Answered on 3/13/08, 10:07 pm
Jonas Grant Law Office of Jonas M. Grant, A.P.C.

Re: Forced to raise my rates? Sub/Contractor service

Absent some obscure law providing for disclosure to consumers or limiting fees charged to consumers for delivery, of which I am not aware but of course have not researched for the purposes of this general reply, and absent a contractual provision or collective baraganing arranagemetn between the parties to the contrary - I agreed with counselor Whipple. The delivery company can always say NO, and refuse to work with the company any longer. If not enough companies will work with them, then they'll have to raise the rate paid to attract deliverers. If there are plenty of competitors willing to take the business, then there's no reason for them to do this. Their argument, a decent one, it seems to me, is that they are collecting a fee for arranging delivery and/or taking a commission in return for using a specific delivery service for all deliveries.

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Answered on 3/13/08, 10:30 pm


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