Pay and collect
The company’s completed some work for a customer. Despite several gentle reminders that their goods are ready for collection they’re still sitting in your yard. Can you start charging for storage or simply dispose of them?
Flag it up
Being able to charge the customer for the space that their goods are taking up in the yard makes financial sense for you. However, unless it’s been brought to their attention in the correct way, it’s a non-starter and you risk losing credibility. The only way to do this is through a clause in the contract. Simple wording such as: “Where the customer fails to take delivery of the goods by an agreed date, the company will arrange for their storage at the customer’s risk and the customer shall pay a storage fee of £X per day” will do the trick.
Tip 1. Make it clear that the goods are on your premises at the buyer’s risk. Should anything untoward happen to them, then it’s the buyer’s problem, not yours.
Tip 2. As well as getting the wording right, make sure that your contract’s binding on the other party. Ensure that they’re given a copy of your terms and conditions before agreeing the deal. Do it afterwards, or put something on the back of your invoice and the customer can ignore your terms. This is a mistake made by many directors. To avoid any future arguments about when they did and didn’t have the contract, produce it in duplicate and get them to sign, date and return one of the copies to you.
Ignorance isn’t bliss
Hopefully, a letter informing the customer that storage fees are accruing will be sufficient to force them into action. But sometimes third parties don’t respond to threats, particularly if they’re in financial difficulties. The last thing you’ll want is someone else’s goods taking up valuable storage space. Instead, you’ll probably want to cut your losses and sell them. There’s just one problem with this - you probably don’t actually own the goods.
Who’s the owner?
Odd though it may seem, even if someone hasn’t actually paid for something, they could still be the lawful owner. This is because the Sale of Goods Act 1979 lays down various rules saying when ownership in the goods passes from the seller to the buyer. And the fall back position, unless you agree anything to the contrary, is that ownership in the goods passes when the contract is made. When the goods are paid for is irrelevant. Therefore, selling something which isn’t yours could mean problems for you and any buyer.
Tip. Be prepared to sue for the price where you’re confident that the buyer has the money. This is because, unlike in a claim for damages, you don’t have to mitigate your losses, i.e. it’s like a debt, you’re not expected to behave reasonably and reduce your loss.
Resale rights. Luckily, if you’ve ruled out suing for the price, s.48 of the Act comes to your rescue (regardless of the ownership of the goods belonging to the buyer), by providing you with a right of resale. To do this, you have to give notice to the buyer that this is your intention and you can only do this when the buyer hasn’t paid you within a reasonable period of time.
The next step
For a free sample letter (CD 09.02.07A) and s.48 notice (CD 09.02.07B) that enables you to sell the goods, visit http://companydirector.indicator.co.uk.
Create your profile to unlock this advice and many more.