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Purchase order for customized Equipment, amounting to $400,0/-, raised and issued to the supplier. The market for the output of the Equipment fell drastically and no scope of market in near future, (before the delivery). Now the equipment delivered. What is the course of action? a) Accept and make the payment. b) Accept and hold the payment. c) Refuse to take delivery. d) Any other suggestion.
Definitely correct answer is A. Accept and make the payment.
a. accept and make the payment
A purchase order is a document sent to a supplier or vendor, authorizing shipment of a product to the customer at a specified price and terms. The creation of a purchase order creates a legally binding contract which cannot be changed without the consent of both parties.
I totally agreed with sreedevi gee..As per mercantile law defines & also guide us clearly in "Sales of goods acts."
When the quotation which you received from supplier was the offer from supplier and once you send the purchase order, it was an acceptance of that offer and creates a binding contract.
Extra,,,, In real world ,While despite of the above facts,the reasonable communication to the supplier may bring your losses to the minimum.if he is a regular supplier then a mutual agreement can be done to revoke the acceptance or offer.Pay damages for customization in machine.Or you can give guarantee of an order to him to supply other machines..etc mostly greed works ;)
a. Accept and take delivery.....As the order is placed before the market fall..
yes it is possible according to the law refuse to take delivery but it is only possible in case of late delivery means in case of suppliers fault apart of this you have to or you should "Accept the order and make payment"
