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Price Adjustments

Dispute Over Whether Multiple Transactions Were Settled For Less Than The Original Invoice Price.
Produce Pointers

The Problem: Dispute over whether multiple transactions were settled for less than the original invoice price.

The Key Point: Recognize that email correspondence may be used to establish that transactions have been settled.

The Solution: Making price adjustments is generally within the scope of a salesperson’s responsibilities.

QUESTION We are a grower-shipper based in Ontario. We’ve recently had difficulty settling up with a U.S. buyer on a number of invoices where they claimed we agreed to a price adjustment. To support the claim, they rely on an email from our sales manager where he lists all the invoices in question (more than 30) and then flags each one as either “OK” or “short paid.” Although they are willing pay the balance of the invoices marked “short paid,” they consider the invoices marked “OK” to be settled and refuse to work with us, despite their lack of USDA inspections or any proof of resulting damages. Also, as the president of our firm, I am the only one who has authority to determine when an invoice has been settled. Does Blue Book support our position?

ANSWER After reviewing the relevant documentation, we cannot support your position in this instance. The email sent by your sales manager appears to indicate that he accepted the deductions taken in connection with the invoices marked “OK,” and sought additional payment in connection with the invoices marked “short paid.” In fact, we see no other way to interpret his email.

And while the buyer does not have inspection certificates corresponding to each of the invoices marked “OK,” it is important to remember that buyers do not need to prove a breach of the sales agreement (or resulting damages), if they can show an agreement with the seller to settle the transactions for some amount less than the original invoice price. Practically speaking, this allows buyers and sellers to settle transactions (that are not genuinely disputed) in a streamlined manner.

You also argue, however, that your sales manager does not have the authority to settle transactions on behalf of your company, and that only you, as president of the company, have authority to make price adjustments.

It is fundamental, however, that your employees’ actions, within the scope of their apparent authority, are binding on the employer.

Blue Book’s Trading Guidelines provide the following regarding an employee’s authority to bind its employer—

The acts and omissions of an agent (e.g., an employee) will be deemed to be the acts and omissions of the principal (e.g., an employer) when the agent has the apparent authority to act on the principal’s behalf. Individuals employed as produce salespersons and/or produce buyers are presumed to have the authority to enter into, modify, and settle sales contracts. If a principal wants to limit an agent’s apparent authority, this limitation should be clearly expressed (preferably in writing) to potential trading partners before the agent exercises his or her apparent authority.