Legal Question in Business Law in California

Re: Prepaid frame order refund

If your written contract terms specify what happens with such special orders, i.e. being non-refundable, then stick to it. That is the position I'd take even if there is no written agreement. At the minimum, you should be able to keep the money necessary to pay for all the materials and S/H, etc., with a refund only of the amount above that. Bottom line, you shouldn't lose any money on the deal because of their cancellation. You could tell them you'll credit/refund them any amounts you are able to collect if you can sell some or all of the product within some specified time period.

If you don't have a written agreement with appropriate terms laid out, you should get an attorney to create one. You might need an attorney to negotiate resolution of this cancellation. Feel free to contact me if serious about doing so.

Re: Prepaid frame order refund

Let's see here....you've been paid in full, and the special-order material for which you were paid in full is now sitting in your shop, useless and taking up space.

If these are the correct facts, I'd guess your questions (to expand a bit on "What should I do") are whether you are liable, legally or morally, to refund any money, and what to do with the unwanted moulding that is now taking up valuable space.

I think the first thing to do is call up the customer and have a friendlt discussion. Your position should be (a) that you procured the material at their request, that it was special order, and that in your opinion they are not entitled to a refund. I haven't seen the P.O. or other documents, but this is presumptively the case. Then, (b) you don't want to store the stuff indefinitely and it belongs, in any case, to them.

Keep in mind that if you were accustomed to storing this moulding for this customer for 5 or 6 years, you can't properly be in too dang much of a hurry for them to remove it, even if it is theirs, because arguably the price they paid you included prepaid storage for a long, long time, and they're entitled to that.

You should also offer to cooperate with them in disposing of the material to a third party on commercially-reasonable terms for both of you, so maybe they can recoup some of their money by selling it for kindling wood, or whatever.

Legally, I think you are a voluntary bailee (or depositary) under Civil Code section 1814, that you are perfoming "storage" under section 1851 because the "deposit" of the moulding was pursuant to a business deal you entered into "for profit," and hence your duty under Civil Code section 1852 is to use at least ordinary care of the stuff. You also have a statutory lien for storage charges, but I'd think that none accrue until you go past the time when the byer has gone past the implied prepaid storage that went with his order.

If you can't work out a deal for the customer to sell the stuff or otherwise get it out of your shop, I'd figure on waiting well over six years, then selling it for storage charges for whatever you can get. Notify the customer beforehand.