There is a level of informality that may arise after you deal with a business partner for several years.  In the beginning of a relationship, purchase orders and invoices may be completed with strict attention to detail while later in the relationship, a phone call or short memo might suffice.  As you may realize, any level of informality becomes an issue when there is a dispute and a breach of contract action is filed in court.

Recently, I ran across a case that involved a company that manufacturered and distributed leather, fur and outerwear.  The manufacturer/distributor filed a lawsuit against a large retailer in which it claimed that the retailer improperly cancelled a significant order after the manufacturer/distributor had created the goods.  The retailer refused to pay for the order and claimed, among other things, that there was no “signed writing” confirming the order, and thus, there was no binding contract.

In response, the manufacturer/distributor pointed to a number of unsigned documents, including a one-page handwritten note documenting the order that was allegedly written by its sales person while he was meeting with the retailer.  The document was unsigned, undated, and did not identify the buyer or the seller.

Ultimately, the manufacturer/distributor lost in court.  Both the trial and appellate courts found that the manufacturer/distributor could not provide evidence of a signature authenticating the transaction, which was required by a statute called the “Statute of Frauds.”

What is the lesson to be learned?  It is obviously easy to conclude that a signature should be obtained.  But, more significantly, it is important for a manufacturer/distributor to train its sales force about basic contract requirements so that the sales team knows the “rules of the road.”  We are happy to provide an in-house educational session on these issues if there is interest.  Please contact us at manufacturinglawblog@rc.com with any questions or interest.

 

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Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.