Legal Question in Business Law in Illinois

Past Precedence FAB

The company I work for makes widgets.

We sell two different styles of widgets to ABC Company and they are our biggest customers.

About a year ago, due to competition, we lowered the price of widget A to ABC Company.

Unfortunately, the ABC Company lowered the price of both widgets they buy from us.

Since then we have repeatedly tried to correct this price discrepancy, but since ABC is our biggest customer we had no choice but to continue to ship parts to them at the lower price.

My view is that this started as a clear breach of contract on the part of the ABC and if we went to court we would win a several months of this price discrepancy due to materials in process. However, I also feel that by continuing to sell the parts at the reduced price, we have essentially entered into a new de facto contract at the lower price.

Does this make sense?

Also what law illustrates this past precedent of buying parts.

Thanks.


Asked on 8/26/03, 9:34 pm

2 Answers from Attorneys
Dennis VanDerGinst VanDerGinst, Roche & Westensee, Ltd.

Re: Past Precedence FAB

We are in receipt of your e-mail of 08/26/2003. Unfortunately, our caseload at this time is such that we would unable to devote the attention to your matter that it deserves. We do, however, appreciate your interest in our firm.

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Answered on 8/28/03, 5:08 pm
John Pembroke John J. Pembroke & Associates LLC

Re: Past Precedence FAB

When something like this happens, the written part of the contract is said to be modified by course of performance or course of dealing. You may recover the initial invoices at the published price, but if you have kept shipping at the new, lower price, that is likely to be recognized by a court as your new "deal".

Someone at a high level should review the situation to determine whether your company can afford to continue, or should continue, shipping with this discrepancy. Correcting the situation without losing the customer appears to require some delicacy, not the threat of a lawsuit over past invoices.

Our comments are based on the question you asked, and your question is being treated by us as a hypothetical. Accordingly, our comments could be substantially and materially different were we advised of all of the relevant facts and circumstances. Our comments are by necessity general in nature, and should not be relied upon in taking or forgoing action in your circumstances without retaining an attorney. In order to fully explore your legal matter, you should meet with us or another attorney and bring to any such meeting all relevant documents and correspondence, and any other relevant facts.

We are not hired to be your attorney, and no attorney-client relationship exists between us, unless and until you enter into a written retainer agreement with us, tender the agreed amount for a retainer and it is accepted by us. We reserve the right to decline representation should circumstances change.

As you are aware, in Illinois there are various deadlines for filing a complaint, filing an answer to a complaint, or taking other action in order to preserve your legal rights, and avoid a complete loss of those rights. You should retain counsel immediately in order to be fully advised of your rights, and to be fully informed of the applicable time period within which those rights must be asserted. If you were to delay in doing so, it might result in your potential cause of action being forever barred.

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Answered on 8/27/03, 10:09 am


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