Q. We recently delivered overseas product to our Toronto customer. Upon arrival, the receiver relayed concerns about condition including bruising and discoloration. Five days after the load’s arrival, our customer advised us that the product had been sold but they were seeking a significant adjustment. To date we have not received any documentation regarding the claim. If we make an offer to settle are we accepting that they do not need to prove damages and provide the proper documentation? What options are available to us?
A. (Answer provided by Jaime Bustamante, Trading Assistance Manager)
Consistent with industry and DRC Rules a valid claim has three parts:
- The receiver must provide prompt notice of a problem. In this case, your customer appears to have complied.
- The supplier must acknowledge a breach of contract or the customer must provide a federal inspection demonstrating a breach.
- Should the inspection show product failed to meet contract terms or DRC Good Arrival Guidelines, the customer still needs to provide the method used to arrive at the offer. In our industry, the most common method is an account of sales quantifying monetary damages. In this example, neither appears to have been made available.
Therefore, to answer your question, you can accept or propose a settlement offer without documentation however you lose your ability to request proof in future. Essentially, you are taking the customers word as fact, acknowledging and accepting the stated condition of the product and the return. If you would like a higher return, you can provide an offer/counter-offer clearly listing the amount you’d settle for and a response deadline with the clause that, should the offer not be accepted, you will be seeking payment in full. If the offer/counter-offer is rejected, the customer will be bound to pay the original invoice price less provable damages (most popular method is with a federal inspection and a prompt and proper account of sales). Lacking this documentation, an arbitrator (should it go to arbitration) would likely award payment in full.
