I've just come across a bit of a strange one and was wondering if anybody could offer some advice please?
It appears that the system I use has a blip and has put an early settlement discount in place for one customer of 35% if paid within 30 days (we don't usually offer a discount). This has only just been noticed but three invoices have been sent out. The customer has just noticed on the latest invoice after having paid the other two in full.
Having now removed the discount from the account am I able to credit and reissue the invoices without the early settlement line and insist that he pays in full or do I need to honour them and refund the full amount he has paid the the first two invoices?
I think that you need to seek proper legal advice for this one.
For a contract to exist there must be offer, acceptance and consideration.
You made the offer of a 35% discount but the customer rejected this by paying the full amount rather than taking the discount. That would annul the original offer as it was not accepted but rather replaced by a counter offer of payment of the full amount.
For the remaining invoice if within the 30 days the offer is still open and could be accepted by the client.
If the goods or services have not already been supplied then this is not an offer by an invitation to treat in which case you are free to withdraw the offer (as was the situation in the pharmaceutical society of Great Britain vs Boots Cash Chemists (southern) 1952).
The impression that I get though is that the goods have already been supplied and it is my belief that if the customer pays the 65% in settlement of the erroneous bill they are actually justified to keep the goods.
Now lets introduce common sense.
How important is this customer to you?
What price do you put on your reputation?
As a goodwill gesture it may be to your benefit in the long run to honor the mistake but make the customer aware that it was a mistake (which was effectively a buy two get one free) otherwise they will expect similar discounts in the future.
The fact is that the customer has come back to you three times and was willing to pay the higher price.
Personally I would honor all three discounts even though for two of them there is potentially no reason to honor them as your offer was rejected.
As stated right at the beginning. If you do not honor the discounts then seek proper legal advice (which may cost more than honoring the discounts!).
Kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
invitation to treat....gosh that brings back memories of law classes!
I agree that the best way of dealing with this is to honour the discounts, as the customer will feel good and you will increase your reputation, making it more possible that they in turn will tell others of the good service they received.
Legally I'm only guessing that once you have sent the invoice out and the goods/service has been performed, then it would be difficult to argue your case, but I'm no lawyer and I would stick to my original thoughts.
I agree with what you have said here Shaun, for the sake of goodwill
I believe that if a genuine error has occured, say an arithmatic error (2+2=3), which is easily proveable then corrections are allowed. However this case is not quite the same, as it can be normal practice to offer an early settlement discount (although 35% seems extremely generous) and the point of it is to encourage early payment (in this case it worked!!).
I think O&OE, is still acceptable on an invoice but it would reasonable to assume that it applied to either an incorrect calculation or the ommision of goods/ services on the invoice.
I still put E & O E on all my invoices (errors and ommissions excepted) as it is clearly an error. No one offers 35% for early settlement, perhaps 3.5%. I would be more inclined to say theer was an error and it was supposed to be 3.5%, I'm sure the customer would accept this. Do you have any other documentation with the price, like an order acknowledgement? (Not sure if this is a bookkeeping client or someother type of customer) Did the client pay the first two within the early discount period? Is the client arguing about it? I think goodwill can go two ways, but without knowing the amounts involved or potential future earnings ity's difficult to say either take the hit or argue the toss. I think you would have a case if you were to re-issue but like the guys have said if it comes to it talk to a friendly solicitor.
